IMPORTANT INFORMATION

1. All investments are designed for the purpose of making a return and are subject to risks. This means that, as well as making money, there is also a chance that you could lose all or part of it. As a general rule, the bigger the potential return, the higher the investment risk and the longer the suggested investment timeframe.
2. Before investing you need to decide how comfortable you are with investment risk and how much risk you are prepared to take to achieve the return you want. This is often referred to as your 'risk profile'.
3. This section only serves as a guide in helping you determine your investment risk profile and does not constitute any recommendation by the FA Rep. It is merely indicative of your investment risk profile, and provides only as a guide for the FA Rep to consider investment products that may be suitable for investors with a similar risk profile. You should take into consideration your current financial situation, investment goals, particular needs and objectives as well as your attitude towards risk when determining your risk profile.

1) Q: How much risk am I willing to take for my investments?

A: As investment objectives and goals differ from person to person, the question of how much "risk" to take is a personal one — no one answer is correct for everyone. Only you can decide what risk/return tradeoff you are comfortable with, but the following questions may help you assess your tolerance for risk.

2) Q: What is risk-return tradeoff?

A: All investments are subject to risk. Risk refers to the possibility that an investment could lose value or not gain any additional value because of swings in the financial markets. By understanding the risk associated with various investment options, you can choose investments that best match your risk tolerance and personal circumstances.

3) Q: How do I decide how to invest?

A: It depends on many factors. If you are like most people, you hate the thought of losing money (RISK) but you also like the idea of making money on your investments (RETURN). So, how much investment risk should you take? Only you can answer this. You need to establish a balance between risk and return that you are comfortable with. When establishing this balance, you should consider:

1. Your risk tolerance — the amount of risk you are comfortable with and can afford to take. Can you still sleep at night if your investments have temporary short-term losses? Do you have enough savings that you can financially afford to take some investment risk?
2. Your investment time horizon — How long will your assets be invested? Your CPF savings are for the long term. Unless you are close to retirement or have a short-term investment time horizon for other reasons, you should generally invest for the long term, but you need to decide what “long” means to you.
3. Your overall financial situation — How much money will you need to sustain your lifestyle during retirement? Do you have other assets set aside for retirement besides your CPF savings? How are all of those assets invested? What are your financial commitments?

4) Q: How do I know if I am investing for the short term or long term?

A: The number of years you have to save and invest is called your "INVESTMENT TIME HORIZON" — it is the amount of time between when you invest and when you need to spend the proceeds of your investments. This spending can be for your retirement or for other financial commitments which you need to meet, such as to purchase a house or to pay for your children’s education expenses.

Source: extracted from CPF website at https://www.cpf.gov.sg/member/faq/growing-your-savings/cpf-investment-schemes/how-much-risk-am-i-willing-to-take-for-my-investments-