There’s a blurred line between investments that are considered low-risk and those that are considered high-risk. Some sellers may even purposely blur this line in order to convince you to invest your hard-earned money in a product that’s not suitable for you.
If you’re wondering what exactly classifies as a high-risk investment, then you’re in the right place. In this guide, we’ve outlined the types of investments that might be considered high-risk, what to look out for and what to do if you’ve already invested in a high-risk investment. Take a look!
What constitutes a high-risk investment?
A high-risk investment can be defined as an investment where a large percentage of your capital is at risk. Typically, high-risk investments offer higher potential returns, but with this comes an increased chance of losing your money. High-risk investments typically include:
- Hedge Funds
- Cryptocurrencies
- Venture Capital Trusts
- High-Interest Returning Bonds (also known as mini-bonds)
- Structured Products (such as guaranteed equity bonds)
- Spread Betting
- Penny Stocks
However, other types of investments (including stocks and shares) can be of high-risk too.
How to spot a high-risk investment and protect yourself
It’s common for those mis-selling investments to play down their high-risk nature. Whether you’ve invested your pension into a property or stocks and shares, there are certain steps you can follow to protect yourself from a high-risk investment, before it’s too late.
- Ask the seller as much information as possible about the investment, and ask them to explain any risks involved. If it sounds too good to be true, it most likely is.
- Ensure the investment product is suitable for your needs. It’s common for high-risk investments to be mis-sold to those who are amateur investors. If you’re unsure, ask a financial advisor for advice.
- Shop around for the best investments. You should never take the first investment product you come across, and if you’re pressured into doing so this is often the first sign you have been mis-sold an investment.
- Ask for a complete, written breakdown before deciding to invest and read it thoroughly.
- Ensure the investment company is regulated by the Financial Conduct Authority (FCA). This is important for any investment.
What to do to if you’ve put your money in a high-risk investment
If you’ve already invested your money in a high-risk product, it might not be too late to claim back what’s rightfully yours. The Financial Conduct Authority sets aside money every year to help those who have lost their savings at the hands of financial mis-selling. If you believe you were mis-sold a high-risk investment (don’t forget to take a look at our guide to what counts as financial mis-selling) then our team can help.
To get started with your claim, fill out our claims form and one of our experts will be in touch (for peace of mind, check out our testimonials page first). The claims form is a short form that will take less than 30 seconds. If you prefer, you can call us on 0161 968 0768 to discuss your claim in further detail, and we’ll send you a form in the post.