There’s no such thing as a risk free investment; risk and return are always linked.

When selecting investments you need to strike a balance between the risk you’re prepared to accept and the return you want. This is a very personal decision.

A frequently quoted yardstick is the “sleep test” which recommends that you only put your money into investments that allow you to sleep at night.

That’s why understanding the fundamental issues of the investment market is so important; the greater your understanding, the more comfortable you’ll be with your investments.

At some stage in the investment cycle, all investment sectors, except cash, are likely to produce a negative return (getting back less than you originally invested). However, generally the longer the investment is held, the lower the risk of a negative return.