By: David Avraamides
I would also add “Liquidity Risk” to your list. If you are invested in things that like alternative assets, hard assets, real estate, collectibles or other investments that don’t have an active, liquid...
View ArticleBy: Flexo
David, That’s a great thought. Liquidity risk is important to consider as well. Generally, most investments people consider a liquid enough, but once you start considering major ownership shares of a...
View ArticleBy: Tie the Money Knot
This is a nice overview. I’ve actively considered market, default, and inflation risk – but haven’t given much thought to mortality risk. But you’re right, it can be a factor to strongly consider....
View ArticleBy: Joe Morgan
I love this post! I can’t believe how many people talk about “risk free investment” as if it’s a real thing. Even US Treasuries carry risk, but because so many people focus only on not losing money (in...
View ArticleBy: Joe Morgan
Liquidity is also a risk in real estate. It’s much easier to sell shares in a REIT than it is to unload a house when the housing market turns sour. REITs are less risky than an investment home in the...
View ArticleBy: Jenna, Adaptu Community Manager
That is why I like taking risk tolerance quizzes. Definitely helps you figure out where you stand.
View ArticleBy: Lance@MoneyLife&More
I think Mortality Risk is a big risk that a lot of people don’t take into account. If you have a pension (my generation doesn’t but older ones might) and it will only pay as long as you live what...
View ArticleBy: Ceecee
I don’t know why but the market seems riskier than ever lately. With the global economy, a problem anywhere in the world causes the market to plummet……and there is always a problem somewhere in the...
View ArticleBy: Roger Wohlner
Excellent post, I agree with the four risks you mentioned plus the comment on liquidity risk. One point about risk in terms of building a portfolio. Pairing investments that might by themselves be very...
View ArticleBy: Investor Junkie
Good post. There is also opportunity risk. You are best putting your money to work in another investment that yields better returns. http://investorjunkie.com/9033/risk-free-investment/ I didn’t...
View ArticleBy: Flexo
You could look to Treasury Inflation-Protected Securities (TIPS) to reduce the inflation risk, though the real increase in prices could be much higher than the government-reported inflation rate used...
View ArticleBy: Flexo
I think risk tolerance quizzes are OK, but not perfect. It’s easy to answer on a quiz that you could withstand a short-term loss of 50% of your portfolio, but it’s another thing to truly experience...
View ArticleBy: Investor Junkie
This assumes the government accurately reports CPI. While I myself own TIPS and I-bonds, I also have other investments not tied to the government accurately measuring something.
View ArticleBy: Flexo
Thanks, IJ! Great point about opportunity risk. I should add that and liquidity risk to the article to edge it closer towards completion.
View ArticleBy: Investor Junkie
Though revisiting this post Flexo is mortality a risk? I mean we know we are going to die, that’s a fact. The question is when, not if. Maybe it’s a matter of syntax. It is really a risk of longevity,...
View ArticleBy: Flexo
I think of mortality risk as it applies to annuities contracts. Maybe longevity is a more accurate term, but I’ve seen this called “mortality risk” by financial planners. Mortality itself is a given,...
View ArticleBy: Investor Junkie
Yea I’m not a fan of annuities in this current market. Why not roll your own? Do you have any discussions/posts about annuities? Especially strategies. It’s something I want to discuss more on my blog.
View ArticleBy: Flexo
Not many. I’ve largely stayed away from annuity topics because they can be overly (and unnecessarily) complicated and avoiding the topic has been easier. It’s something worth exploring more, though.
View ArticleBy: Roger Wohlner
All of the comments are right on, certainly opportunity and liquidity risk are keys in addition to the four mentioned in the post. Longevity risk in my experience in dealing with near retirees who seek...
View ArticleBy: Adam
Great article, outlining the major risks with taking investments. I have an investment banker friend who strongly recommends putting 90% of their money in very safe investments like bonds, while...
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