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By Natalie Saar / Jan 13, 2016

What is the Investment Risk Pyramid?

investment risk pyramid

View the text alternative for the investment risk pyramid (below)

When it comes to getting started with investing, you may have a lot of questions. There are so many options out there, and each of them holds some degree of risk. Because of this, an Investment Risk Pyramid is a handy tool for people to compare the levels of risk and their potential for return.

The base of the pyramid represents lower risk assets, and as each tier narrows, the options present more potential risk. Though, keep in mind that with a greater risk, there’s often a greater potential for reward.

investment risk pyramid infographic

Now that you’re thinking about where to invest your money, it’s time to decide what your risk tolerance is and what your time horizon is; next use that information to create a solid plan. If you’re not sure what you want to do and need help, we’d be happy to help you establish some strategic solutions. When considering investments, it’s always a good idea to seek professional guidance from qualified investment advisor who can help you.

Tier 1 – Speculative and emerging market stocks, junk bonds, options and futures contracts

Tier 2 – Blue chip stocks, real estate investments, royalty trusts

Tier 3 – Investment-grade corporate bonds, government bonds, high-grade municipal bonds, fixed interest securities

Tier 4 – Savings accounts, CDs, treasury securities, insurance, money market accounts, cash

 

If you still need assistance creating a strategy for your investments, we’re happy to help!

All investing involves risk. You should consider the objectives, risks, charges, and expenses of an investment carefully before investing. This article is for informational purposes only; nothing herein should be construed as investment advise, or as a recommendation to purchase or sell a particular investment.

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