Choosing a risk level you can live with

Every portfolio carries some risk, and the useful question is how much movement you can watch without doing something hasty. Answer honestly. A portfolio you sell in a bad month has done you no favours, whatever the label on it said.

Ask about the bad year

When you look at a risk level, ask what a poor year would look like in pounds rather than percentages. A fall of a fifth on a pot of twenty thousand is four thousand pounds, and that number is easier to picture than a chart on a page.

Time matters too. Money you need next spring does not belong in a portfolio built for a decade, no matter how comfortable you feel while markets are rising. Money you will not touch for years can usually carry more movement in exchange for a better chance of growth.

We do not tell you which level to pick. What we do is explain, in plain words, what each level holds and how it has behaved when markets turned. The decision stays yours, and it can change later.