Here’s a brief explanation of the key differences between conservative, balanced, and growth investment strategies in terms of risk:
🔹 Conservative Strategy (Low Risk)
- Focuses on capital preservation with minimal risk.
- Higher allocation to fixed-income assets and cash.
- Lower potential returns but more stability in market fluctuations.
- Suitable for investors with a short-term horizon or low risk tolerance.
Hejaz Example: This option focuses more on conservative asset classes, with 65% in compliant income (income-generating investments such as the Sharia compliant financing of property, businesses and vehicles) and 5% in cash (non-interest bearing), and 30% in growth assets (such as shares and property), aiming for stable returns with lower risk.
🔹 Balanced Strategy (Moderate Risk)
- Mix of growth and income assets for a balance of risk and return.
- Includes a combination of equities, property, fixed-income, and cash.
- Moderate exposure to market fluctuations, offering both stability and growth.
- Ideal for investors with a medium-term horizon who can tolerate some risk.
Hejaz Example: This option is more diversified with 60% in growth assets, 5% cash and 35% in compliant income, balancing risk and return.
🔹 Growth Strategy (High Risk)
- Prioritises capital appreciation with a higher allocation to equities and property.
- Higher potential for long-term growth but with greater volatility.
- Suitable for investors with a long-term horizon and a higher risk tolerance.
- More susceptible to market downturns, requiring patience and a long-term mindset.
- Each strategy aligns with different financial goals, risk tolerance, and investment horizons, allowing investors to choose based on their comfort with market fluctuations.
Hejaz Example: For those seeking higher returns, the growth option allocates 75% to growth assets, 25% cash and compliant income, targeting capital appreciation, along with income generation.