Yes, there's always an element of risk when investing. Investment risk is a double-edged sword, giving your savings the potential to increase or decrease in value.

When investing, it's important to understand the risks before you dive in, so you can make an informed decision about what's best for you.

The risks of investing can be complex, so we've broken them down for you. Please remember this is a general overview and not a comprehensive guide. Tax treatment depends on your circumstances and may change.

The ups and downs of investing

Firstly, remember that the value of your investments can go down as well as up. This means you could end up with less money than you put in. However, over the long term, investments have the potential to provide higher returns than cash. So it's vital to be patient with investments and give them enough time to grow, ideally five years or more.

To help you understand the potential risks and returns, we provide comparison tables for available investments. But nobody can see the future, so remember these tables are only projections and should not be seen as a reliable prediction of an investment's future performance.

Understanding investment risks

1. Different funds have different risks

A fund is a type of investment where your money is pooled with money from other investors and managed by a third party. A fund bundles together lots of smaller investments to spread your money out, so you don’t have all your eggs in one basket. There are different types of funds, each with different levels of risk.

Here are some key points to consider about funds in general, not specifically those offered by NatWest Cushon:

• Transferability and withdrawal: Depending on the type of fund, units in funds may not be easy to sell or transfer. This could mean you have to hold onto your investment for longer than you planned.
• Regulation: Some funds might not be regulated, which means they might not offer the same level of protection as regulated funds.
• Leverage: Some funds borrow money to pay for investments. This can increase risks and costs.
• Strategy: Some funds specialise in specific markets or asset classes. This can increase risk if these markets don't perform well.
• Valuations: It can be hard to value funds that invest in illiquid assets, which are assets that cannot be readily sold - like properties or shares in private companies - making it challenging to know the true value of your investment.
• Underlying assets: A fund's assets can be diverse and include both long and short positions in a range of assets, including derivatives – which are assets whose values depend on other assets.
• Management of the fund: The performance of a fund largely depends on the fund's investment manager. If the manager does not perform well, this could lead to losses for the fund.

2. Suspensions of trading

Sometimes, unforeseen market conditions can make it impossible to sell your investment because trading has been halted or restricted. This can happen when prices changes rapidly, when unusual stock market movements occur or when there are technical glitches, among other reasons. Suspensions are there to protect investors and are put in place by financial regulators.

3. Investor protection

Remember, as outlined in this other article 'What happens to my savings and investments if Cushon get into financial problems?', your money is kept in a ring-fenced account that's protected, even if we were to face any financial difficulties.

Your money is held at a bank in a client money account that is in trust and separate to our own money. In the unlikely event that a bank where client money is deposited defaults, deposits may be eligible for FSCS protection. For further information about the FSCS, including the limits that apply and the conditions for making the claim, please refer to the FSCS website at www.fscs.org.uk/. Similarly, investments we hold on your behalf are not held in our name, they're held separately in trust as client assets.

In the unlikely scenario that you lose money due to us or one of our partners facing financial issues, you might be covered by the Financial Services Compensation Scheme. Investment business undertaken with NatWest Cushon in the UK may be covered by the FSCS, the cover depending on the nature of the claim being made. FSCS cover is not available for loss of money resulting from performance of the Fund. Full details of the FSCS, including the limits that apply and the conditions for making a claim, are available at www.fscs.org.uk/.

Remember, investing is a long-term commitment and involves risk. But with careful planning and understanding, you can make informed decisions about your investment.