When you set up your Grünfin portfolio, you can choose between three risk level settings - low, medium and higher risk.
In allocating different asset classes (like stocks and bonds) to your portfolio, they are assigned a different risk vs return ratio based on something called strategic asset allocation. This investment strategy determines what percentage of your investments should be in stocks vs. bonds.
Typically, a low-risk portfolio is assigned a higher allocation of bonds, while high-risk portfolios are assigned a higher allocation of stocks.
🌱 Higher risk usually means higher return, but also bigger falls when the markets go down. However, a longer time horizon makes your investment more tolerant of higher risk, since losses can be recovered over time.
🌱 Low-risk portfolios are less volatile, but also tend to provide lower returns.
🌱 Portfolios with a target under 3 years will automatically receive low-risk allocations.
🌱 You can change the risk level of your active portfolio for free and any new purchases to your portfolio will be made according to your new risk level settings.
Focus on the right risk for you, and think long-term.