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What is Risk vs. Return or Risk vs. Reward and how might it affect my decisions?

Let's be frank. There is not an Investment type in the world that doesn't come with risk. At any one time, there are a number of things that could affect an investment. Political risk, Legislative risk, Currency risk, Inflationary risk just to name a few.

By way of example: You could buy a property to let, struggle to find tenants for a long period of time, then have a bad non-paying tenant you can't evict, have floods knock over a boundary wall etc. etc. You get the picture.

So you can't avoid risk. The important thing is how you assess how certain risks (some more obvious, some unexpected) might affect the outcome of your investment, and then manage those risks as best as possible.

When trying to decide if a basket or bundle is right for you, it's important to remember that higher risk shares normally offer higher rewards! This means that the shares that have the potential to give you the biggest returns are also the most risky.

So when you are making an Investment decision it's important to operate within the range of risk that makes you feel most comfortable.

To try and help you understand your degree of comfort with regards to risk when investing, we've taken on a pretty nifty tool (we think!) that establishes a Risk Number for you - you can use that tool here What is my Risk Number?

Once you have your risk number, you can use it as a guide to decide on what Bundles might be suitable for you.

You'll notice that all the Bundles and Baskets on EasyEquities have a risk range.

If your risk number fits within the risk range of a particular bundle, it means that Bundle should be a good match for your risk appetite.

PLEASE NOTE: The risk number established by this tool is simply a rough guide as to how you think about risk and what baskets or bundles might suit you.

However, it is by no means a definitive indicator of what you should buy.

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