Risk

Risk

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The chance that your investment outcome is not as expected.

This can mean many things:

a) you permanently lose your money in part or in full. Otherwise known as product failure.
b) the returns you receive are not the returns you expected although this should not be confused
with volatility which is the normal ups and downs of investment returns as the investment moves
through it’s cycle.

There are other types of risk involved such as:

a) longevity risk, the risk of you outliving your money.
b) Inflation risk, inflation can cause money to lose buying power over time.
c) Interest rate risk,  interest rates go up and down depending on the economic climate.
d) liquidity risk,  the risk that you cannot access your money when you want.
e) legislative risk, the government can change the law causing an adverse outcome for the
investor.