The European Risk Rating is a scale that determines risk in investment.
An Approved Retirement Fund is an investment vehicle like all others. Its value can rise or fall depending on the performance of the markets it trades within.
When you are setting up your ARF you will have the freedom to choose a risk level that suits your appetite for risk and your personal drive to achieve greater value in your fund.
The higher the risk, the higher the potential for profit and growth. However, the higher the risk, the higher the chance of losing money also.
Consequently, the risk levels available and the opportunity to offer them to customers is highly regulated at the EU level.
To better understand risk we use the European Risk Rating. It is a sliding scale of risk that clearly illustrates the potential and pitfalls of taking on greater risk.
It helps a potential investor make an informed decision around the type of risk they are entering into with their ARF.