Guide to risks

We’ve put together this guide to help explain the kind of risks one should think about before making an investment with TFG CROWD. The first section looks at risks to capital. The second looks at risks to tax benefits.

Please note that we do not offer investment or tax advice.

Often investors look for growth in the value of their investment or regular income to be generated from it. However, the value of an investment, and any income from it, can go down as well as up. This means investors may get less back from their investment than they put in. Investors should always remember that the way an investment has performed in the past is not a guide to how it will perform in the future.

Different types of investment involve different types and levels of risk. So it’s important to build a portfolio of investments which reflect the tolerance for risk over the investment timeframe.

The value of many investments fluctuates in response to company and economic news. The extent to which this happens depends on the type of investment it is. For example, company shares, also known as equities, can rise and fall significantly from day to day. Some managers will attempt to reduce the volatility of their portfolio by holding several different companies which may not all react the same to changes.

As well as the general risks outlined above, some investments involve specific risks that investors need to bear in mind. The most important of these are listed below.

Shares in smaller companies can experience bigger and more abrupt price movements than larger company shares. This may be a result of relying on limited product lines, markets or resources.

In addition, it can be more difficult to sell shares in smaller companies, as there are usually fewer potential buyers in the market. This means that investors may not always be able to access their capital as quickly as they would like.

Over time, inflation will reduce the value of investments in real terms.

An investment company like TFG CROWD may try to counteract the effect of exchange rate changes through ‘hedging’. It is not always possible to do this perfectly, however, especially at times of extreme market volatility. It may also involve extra costs. Read the relevant product literature for more details.