Investment: risk and reward
In investment terms there is a fairly direct relationship between risk and return. The higher the potential return, the greater is the risk and vice versa.
If you have control of the investments in your pension fund, you need to consider not only the returns you might expect on the investments but also the risks.
Investments can be expected to rise in value in the long term but can also fall in value, sometimes very rapidly and by a large amount.
The main asset classes used for investment of pension funds are equities, properties, bonds and cash...
Passive management and active management have very different costs...
The returns earned on pension fund investments are made up of two components...
Pension fund investment risk comes from three main sources..
Setting investment strategy for a funded defined benefit scheme involves the trustees deciding on the main elements of how the assets of the pension scheme should be invested...
As a member of a defined contribution scheme or if there is a DC element to your defined benefit scheme or if you have a personal pension or PRSA...
A default fund is an investment option that is used in PRSAs and most defined contribution schemes if you do not exercise your own right to choose how your fund is invested...