Investor Understanding and Affordability
It is important that you understand the risks of loss that are normally associated with this type of investment, and that you have the necessary financial resources to bear such losses. Before considering an investment with Principal, you should ensure that:
§ you understand that investment markets can be volatile;
§ you have sufficient income to cover your regular outgoings;
§ you have a 'rainy day' fund set aside for potential emergencies; and
§ you are able to withstand the risk that the portfolio could fall in value.
Please note that Principal is an investment management specialist and does not provide a general financial planning service. If you are in any doubt as to whether our portfolio management service is suitable for you in light of your overall financial position, we strongly recommend that you consult your independent financial adviser, or see 'What if I don't have a financial adviser?' page.
The main risks of investments are summarised below. Please note that should you wish to become a client of Principal, we will provide you with additional information about the types of investment we anticipate incorporating in your portfolio, and the associated risks.
Equities
Equities can be more volatile than other asset classes, and should therefore be regarded as a medium to long-term investment. You may not get back all that you originally invested, particularly if you withdraw in the first few years. Investments in managed funds may be subject to an initial charge
Fixed Interest
The value of fixed interest investments (such as government gilts and corporate bonds) may fluctuate before maturity. In the case of corporate bonds, you may lose some or all of your capital if the issuer goes bankrupt and cannot repay its debts,
Gearing
Some portfolios may include investment funds (including property funds and hedge funds) that use gearing as part of their investment strategy. Such funds may be subject to sudden and large falls in value, and you may get back nothing on this part of your portfolio if the fall in value is sufficiently large.
Property & hedge funds
Investment in property funds and hedge funds should be viewed as a medium-term investment, as in certain circumstances it may be difficult to liquidate such investments quickly. Some hedge funds are not regulated by the FSA.
Overseas
The value of investments in overseas securities may also rise and fall purely as a result of exchange rate fluctuations.
Cash
Capital on deposit with a bank or building society is generally regarded as secure and is immediately accessible.
Performance
Past performance is not a reliable indicator of future results.
Taxation
Any tax reliefs referred to are those currently available. Their value depends on the individual circumstances of the investor. Levels and bases of, and reliefs from, taxation may change.
Suitability
If you have any doubt about whether any of these services are suitable for you, or if you would like further information, please consult your financial adviser or contact Principal for advice.
Ethical
Imposing ethical constraints on a portfolio will increase its risk profile.