What is risk in Raiz?

Risk is the level of variability you are willing to accept for potential investment returns.  With higher risk, comes greater potential returns but also a larger chance of loss.  

Although every investment involves risk, it is important to consider assets with the potential for higher long-term gains are often associated with greater short-term risk.

It is therefore essential to take into consideration the time frame of your savings goal when selecting an Raiz portfolio that suits you. Are you wanting to use Raiz to save up for a holiday in a few months, or are you in it for the long haul?

Managing Risk with Raiz

Raiz allows you to select one of following 5 risk profiles for your account.

Some people with short-term goals of around a year or less prefer secure assets that have low volatility, stable returns and lower risk, in exchange for smaller potential returns. These type of short term investors are better suited to a more conservative portfolio.

Others with long-term goals of greater than 3 years may be able to afford risky investments in the pursuit of high profit potential and are prepared to accept short-term fluctuations, and will select a more aggressive Raiz portfolio.

Conservative

Conservative portfolios will be weighted toward fixed income and cash based ETFs, typically have lower risk and lower return potential. Investors using the profile may expect to use the money after a 3 or 6 month period.

Moderately Conservative

This portfolio is used by investors concerned with protecting their money. It is associated with low - moderate risk and some potential capital growth. Investors should use this portfolio if they expect to have an investment time frame of about a year.

Moderate

This portfolio has ETF weightings towards Australian and international equities, fixed income and cash. It has moderate capital growth potential and a moderate level of risk. Investors would use this profile if they have no specific savings goal and are just looking to see how much they can accumulate from Raiz features such as Roundups.  These investors expect to have an investment time frame of 2 to 3 years.

Moderately Aggressive

This portfolio has weightings towards international and Australian equities. It involves more risk with the potential for higher returns. Investors are comfortable with volatility and negative returns in the short run. They typically have a 3 - 5 year investment horizon.

Aggressive

This portfolio invests towards ETFs in international and Australian equities. It has high risk and the potential for even higher returns. Similar to the moderately aggressive portfolio, investors should be comfortable with volatility and negative returns in the short term. They should have an investment horizon of 5 - 7 years. 

What does this actually mean for your investments?

Your saving goal should determine your portfolio choice not what you expect the market to do soon. Raiz provides five portfolio choice by varying the weightings of 7 ETFs. You can view these weightings and more details about each ETF by visiting the PDS at https://Raizinvest.com.au/product-disclosure-statement/.

Whatever your goal, Raiz has the portfolio that will suit you.