Investors still remain extremely nervous about the ongoing European sovereign debt crisis, however inflation is another threat that is getting less attention. Even though we are currently in a historically low interest rate environment in Europe.....soaring inflation is seen as a very real risk in the short term.

 Why? Well in Ireland inflation is currently running at more than 2% meaning a deposit account earning 2.5% is doing little better than breaking even!!

 A recent research report from investment fund managers State Street highlighted that those investors who remained entirely in cash in the first half of 2012 saw the value of their investment decline in real terms.

The State Street report also indicated that investors who are willing to take on a little risk through and allocation to the stock market are doing better than those who remain in cash. Of course a fund manager would say this but I do believe that there is some substance in what they are saying and their findings should be noted!!

Fund managers are all to aware of the numbers of mistakes that they have made in the recent past and as such have shied away from launching new products as investors seek out more conservative, risk-free options.

With this in mind for those of you who are looking to invest money, we as advisers, will spend some time assessing your risk profile in order to comply with the new consumer protection code from the Central Bank. This I do believe is a timely development especially when you consider the number of complaints the Financial Ombudsman receives each year over risky investment products that were sold inappropriately to people.

 The key for all investors is to establish your risk profile to ensure that the investment fund chosen matches your individual attitude to risk. A Risk Assessment Questionnaire is a tool we at AGS Financial Services use to manage investors risk expectations to make sure the correct fund diversification are met.

To explain, for a conservative investor the tool highlights that the investor is only prepared to take on a small amount of risk in order to achieve a modest or relatively stable return. The converse of that is that the tool also highlights those investors who want high long-term returns and are prepared to accept "the full extent and frequency of stock market fluctuations" in order to achieve this i.e. a risk averse investor.

So no matter where you find yourself on the risk/reward spectrum the Risk Assessment Questionnaire tool ensures you are correctly matched to the investment fund specific to your needs and expectations.

One such fund manager, Standard Life, has created a new suite of funds which fit all investor attitudes to risk and offers an easy way to match your own individual risk profile with an appropriate investment fund. For a full insight please click here.

If you wish to assess your risk profile and find out more about savings or investments please contact Alasdair today on 01 810 1912 or email info@agsfinancial.ie he will be happy to carry out a FREE risk assessment review.