Understanding Risk/Return Ratios

As you can see from the chart, choosing the right mutual fund should not depend entirely on the mutual fund's returns. Before investing, you should consider the risk profile of the mutual fund you plan to purchase.

Money Market Funds tend to carry the lowest risk and the lowest return.

Bonds, Mortgage & Dividend Funds are less risky than growth funds, but returns tend to be lower.

Balanced Funds carry somewhat more risk than an income fund but there is potential for higher return.

Growth Funds carry the most risk but also have the potential for the highest return.

You can build a well-diversified portfolio by holding a number of different types of mutual funds and by investing in funds that have different management styles.

The information contained herein is considered accurate at the time of posting. CIBC, CIBC World Markets Inc. and CIBC Investor Services Inc. reserve the right to change any of it without prior notice. It is for general information purposes only. Clients are advised to seek advice regarding their particular circumstances from their personal tax advisors.

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The information on this Web site is general only; it is not intended as specific investment, financial, accounting, legal or tax advice for any individual, and you should not rely on it as such.