Understanding Risk: How Your Investment Profile Shapes Your Financial Future
Many South Africans invest without understanding their risk tolerance — a mistake that can cost them. Whether you lean towards conservative, medium, or high-risk, knowing how much volatility you can handle matters more than chasing the highest returns.
“People often think risk is about being reckless or playing it safe,” says Pedri Reyneke, CEO of Multilink Financial Services. “In reality, it’s about knowing yourself and your goals. A conservative investor protects what matters most, a high-risk investor accepts a bumpier journey for growth, and medium-risk investors balance the two. Knowing your profile makes investing far easier to navigate.”
A risk profile measures how much risk you're willing and able to take. It guides your investment choices and helps you handle market ups and downs.
Conservative investors focus on stability with modest returns and low exposure to volatility. Medium-risk investors accept some fluctuations while aiming for steady progress. High-risk investors pursue aggressive growth, knowing the ride can be unpredictable and requires patience.
“Choosing a profile isn’t about picking winners,” Reyneke adds. “It’s about matching your investments to your goals and temperament. Chasing returns you can’t emotionally handle leads to stress, not wealth.”
Reyneke’s advice: start small, ask questions, invest only in what you understand, and review your portfolio as your goals evolve. Diversify to spread risk and maintain a steadier path toward your financial objectives.
“Investing isn’t a sprint; it’s a journey,” Reyneke concludes. “The sooner you understand how risk fits into your planning, the more confident you’ll feel. Whatever your strategy, knowing your profile helps you make decisions that make sense for your life.”
