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Home Guidance & tools Investing basics Investment risk and return

Investment risk and return

It’s important to remember that risk is about balancing the chances of a loss with the benefits of a higher return over time, while volatility – the inevitable ups and downs of the market – is an integral, often short-lived part of investing.

A higher level of investment risk—usually found in individual equities—often means that the potential for growth is greater, but there’s also a greater possibility that your investment might fall. Cash funds, on the other hand, carry lower risk but with that come lower potential returns.

When it comes to your own portfolio your tolerance for risk will help you decide which assets to invest in and how much to afford them. Once this is decided and your blend of assets is in line with your goals it’s all about letting time do the work so try not to focus on short-term market fluctuations but on the long-term potential of your investments.

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The risk-return spectrum

This image shows a spectrum moving from the left where assets with lower risk bring lower growth potential towards the right, where assets carrying higher risk bring the potential of higher growth.

Understanding market volatility

It can be worrying when stock markets go down. Our guides will help explain what to do - and what not to do - during times of uncertainty.

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Putting time on your side

This guide explains why we take a long term view to investing.

Open the Putting time on your side guide
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When doing nothing is best

This guide explains why timing the market can be a risky business.

Open the When doing nothing's best guide

Explore more principles for good investing

Regular savings

Find out how a regular savings plan can help your money grow.

Read more about regular savings

Asset allocation

Learn more about each asset class, its possible risks and potential benefits.

Read more about asset allocation

Our principles

Read more about making your money work harder for you.

Read more about our principles

The value of investments can go down as well as up so you may get back less than you invest. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to an authorised financial adviser.

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Fidelity Personal Investing does not give advice based on personal circumstances so you are responsible for deciding whether an investment is suitable for you. In doing so, please remember that past performance is not necessarily a guide to future performance, the performance of funds is not guaranteed and the value of your investments can go down as well as up, so you may get back less than you invest. When investments have particular tax features, these will depend on your personal circumstances and tax rules may change in the future. Before investing into a fund, please read the relevant key information document and ‘Doing Business with Fidelity’, a document that incorporates our Client Terms. If you are investing via the Fidelity SIPP and have not yet received a letter from us confirming you have moved to our new system, or are opening a new SIPP today you should read the Fidelity SIPP Key Features Document incorporating the Fidelity SIPP Terms and Conditions. Alternatively, if you open a new SIPP account on or after 27 March 2019 and are under 54 years old, or if you have already received a letter from us confirming you have been moved to our new system, you should read the Doing Business with Fidelity document incorporating our Client Terms. You should regularly review your investment objectives and choices and if you are unsure whether an investment is suitable for you, you should contact an authorised financial adviser.

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