Daunted by the Riskometer? Don't stress!

Investment planning can sometimes feel like navigating a complex maze, leaving many of us scratching our heads. And what’s with the many lines of text that they call “disclaimers” and the semicircle that they call “riskometer.” Yikes! But fear not, fellow adventurers!

The riskometer, the tool that measures investment risk, doesn't have to be a stress-inducing nightmare. In fact, let’s decode the riskometer right away:

Okay, think of the riskometer like a speedometer. Just as a speedometer tells you how fast you're driving, the riskometer tells you how risky an investment is. It's like a friendly little guide on your investment journey. Now, let’s dive deeper:

Decoding the Riskometer:

The riskometer has levels, like steps on a ladder, ranging from low risk to high risk. Each level gives you an idea of the riskiness of an investment option. Let's break it down:

Low risk

Investors investing in Funds categorised as ‘Low Risk’ can expect their principal to be subjected to Low Risk. Investments in this category are suitable for investors willing to take minimal investment risks.

Low to moderate risk

Investors investing in Funds categorised as ‘Low to Moderate Risk’ can expect their principal to be subjected to minimal market risk. This category is suitable for conservative investors.

Moderate Risk

‘Moderate Risk’ Funds are suitable for semi-conservative investors willing to take limited risks on the invested capital with an intention to create wealth.

Moderately high risk

Schemes in this category are exposed to market forces typically equity-oriented risk on the invested principal. These are suitable for aggressive investors with medium to long-term investment horizon (3 + years).

High risk

‘High Risk’ Schemes are suitable for aggressive investors willing to invest for the long term (>5 years). Invested principal in these schemes can be subjected to high risk & higher market volatility.

Very High Risk

These schemes predominantly invest in equity with higher relative risk profile as compared to other funds highly volatile stocks. It is suitable for very aggressive investors. Here the Invested principal is subjected to highest risk in the mutual fund spectrum with the objective of long-term wealth creation. This category of funds includes sectoral/ thematic/ international/ midcap/small funds.

How to apply riskometer to your mutual fund investments?

Each mutual fund scheme has its own riskometer. You'll find equity funds, debt funds, balanced funds, and more. Each scheme within these categories comes with its own unique riskometer to help you choose the risk level that suits your risk appetite. Here’s how you can make the most of it:

1. Risk Appetite is the Name of the Game:

Before embarking on your riskometer journey, take a moment to assess your risk appetite. Consider how comfortable you are with taking risks based on your financial goals, timeline, and personal circumstances. It's like knowing whether you prefer a leisurely hike or an adrenaline-pumping adventure.

2. Seek Some Expert Advice:

If the riskometer or other investment aspects have you puzzled, don't hesitate to seek advice from financial professionals. They're like guides who can help you with tailored investment strategies to suit your goals.

3. Stay in the Know:

Keep an eye on the riskometer of your mutual fund investments. It changes every month basis market conditions. Stay updated on market trends.

There! We have now decoded the mysterious riskometer. Remember, investing is an exciting journey filled with calculated risks. So, embrace the riskometer, enjoy the ride, and let your financial goals soar!

References:
https://www.valueresearchonline.com/stories/48907/decoding-the-new-riskometer/

*Investors should consult their financial advisers if in doubt about whether the product is suitable for them. This document represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The material is prepared for general communication and should not be treated as research report. The data used in this material is obtained by Axis AMC from the sources which it considers reliable.

While utmost care has been exercised while preparing this document, Axis AMC does not warrant the completeness or accuracy of the information and disclaims all liabilities, losses and damages arising out of the use of this information. Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s). The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Statutory Disclaimer: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC) Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.

Mutual fund investments are subject to market risks, read all scheme-related documents carefully.