Beginner’s Guide to Risk

The word “risk” comes up a lot when it comes to investment. Why is it so important, and what does it mean?

What is risk?

Investment risk means the possibility you could lose some or all of your money that’s invested, and you might not reach your investment goals. All investments come with risk, but the risk level varies. It’s a great idea to set up your investments in line with your personal risk profile.

Your risk profile

Your risk profile is your personal ability, and willingness, to take risks. Working out your risk profile can cover things like your investment time frame, your comfort with investing, your personal financial situation, and your money and investment goals. You may have a high risk tolerance – you’re happy to risk more in order to hopefully achieve higher rewards (returns). Or you may have a low risk tolerance – you’re happy to accept a lower risk level – and a bit more stability –  in return for lower rewards (returns). Your risk profile can be used to help structure your investments. You can find out your risk profile on Sorted, or see a financial adviser.

Help! Too much risk?

Taking on too much risk than you’re comfortable with could leave you feeling anxious or nervous about your investment. You might be happy to get higher returns, but you might not enjoy the experience of market volatility (seeing ups and downs in your investment balance along the way). 

Help! Too little risk?

Not taking on enough risk might leave you unsatisfied with the returns you are earning on your investment, and you could be unable to reach your goals. Taking on more risk could help you reach your goals faster, if you can tolerate more volatility. 

Scam alert

Any investment opportunity that offers low risk with high returns could be a scam. If it seems too good to be true, it usually is. 

Tips to manage risk

  • Diversify your investments across a range of risk levels
  • Are you prepared for a financial emergency? Avoid having to sell your investments during a downturn. Having cash handy could help.
  • Do your research thoroughly. Investments like cryptocurrencies are not regulated in New Zealand. 
  • Get financial advice. Even if you have a small portfolio, financial advice can help you with your goals, risk, and diversification. 
  • Review annually, or when your circumstances change, to see if your investment balance still suits.

Information correct as at May 2021. Pie Funds Management Limited is the issuer and manager of the JUNO KiwiSaver Scheme. Click here for our Product Disclosure Statement. Any advice is given by Pie Funds Management Limited, and is general only. It relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees if you act on any advice. As manager of the Scheme we receive monthly fees that are determined by your balance and whether you are 13 years or over. We will benefit financially if you invest in our products. We manage any conflicts of interest via an internal compliance framework designed to ensure we meet our duties to you. For information about the advice we can provide, our duties and complaint process and how disputes can be resolved, visit All content is correct at time of publication date, unless otherwise indicated. Past performance is not a guarantee of future returns. Returns can be negative as well as positive and returns over different periods may vary. Please let us know if you would like a hard copy of this disclosure information.