Toronto Finance: Understanding Risk

Understanding Risk
Daniel Saikaley CA CFP
Investment Advisor, CIBC Wood Gundy

Risk is one of those four-letter words that people try to avoid, particularly when it comes to investing their hard-earned dollars. Because although risk does not necessarily mean that you're going to lose all your money, it's this image that often springs to mind when the subject is first broached.

Having said that, it's impossible to completely eliminate risk since all investments carry some degree of it. The key to being a successful investor is to determine the level of risk that you are prepared to tolerate, and then invest accordingly. But before doing this, you need to understand risk and the various forms in which it can appear.

Broadly speaking, risk is the possibility that the expected return on your investment may not be fully realized. This includes the possibility that you may lose some principal. However, there are in fact five categories of risk you need to consider when assessing an investment:

With a greater understanding of the various forms of risk, you'll be in a better position to find ways to help reduce risk.

Daniel Saikaley, CA CFP
Investment Advisor
CIBC Wood Gundy
50 O'Connor St., Suite 800
Ottawa ON K1P 6L2
[email protected]
613 783 4674
800 267 9345
my website

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