When you make an investment, your aim is to see it grow. It's therefore important to think very carefully about the fund(s) you choose to invest in.

All investment carries an element of risk. Different types of investment carry different levels of risk. When deciding how to invest your contributions, make sure you choose a fund that carries the right level of risk for you. Continually review this decision as your personal circumstances change.

There are many different forms of risk. The main ones you need to be aware of are:

• Inflation risk: This is the chance that the value of your investment doesn't keep up with rising prices. This occurs when you're young due to decisions made about which investments to use. However, the effects are felt when you're older and your account hasn't kept pace with inflation. Equities can help you manage this risk.
• Pension conversion risk: The cost of buying a pension outside the plan varies from year to year. Pension conversion risk is the chance that your investment doesn't keep up with the cost of buying a pension when you come to retire. This type of risk is important if you're approaching retirement and are about to buy a pension. Bonds and gilts can help you manage this risk.
• Capital value risk: You invest with the hope that your investments will go up, but this isn't guaranteed. Capital value risk is the chance that your investment will fall in value. As you get older you may have insufficient time to gain back the capital value. If you're risk averse you may have a knee-jerk reaction to poor equity performance and sell equities at an inappropriate time. This type of risk is most important if you're approaching retirement with a particular benefit in mind - especially the cash sum. Investing in cash funds can help you manage this risk.
• Opportunity cost risk: If you take insufficient risk when you're younger, the result could be a smaller balance with which to buy pension. This type of risk (sometimes referred to as 'reckless conservatism') is most relevant if you're young, but as you get older you could suffer from an insufficient balance due to your actions when you were younger. Low contributions also give rise to opportunity cost risk.

Use the risk ratings link on the left hand menu to see what risks are associated with different types of investments. You can also use the risk questionnaire to find out your level of risk tolerance.

If you're not sure what level of risk is right for you, you should speak to an independent financial adviser.