What is longevity risk?
Where someone lives longer than their finances
What is systematic risk?
Market risk (systematic risk)
This is the risk that the whole market falls, so most investments drop in value.
What is non-systematic risk?
Company-specific risk (non-systematic risk)
This is the risk that something goes wrong with one particular company, causing its value to fall.
What risk occurs when rising prices reduce the real value of savings and investment returns?
Inflation risk
What risk arises from government policy changes, taxation changes, or new regulations affecting investments?
Political and regulatory risk
What risk occurs when exchange rate movements reduce the value of overseas investments when converted back to the investor’s home currency?
Currency risk
What risk arises when an investment cannot be sold quickly without accepting a lower price than its fair value?
Liquidity risk
What risk occurs when poor investment returns early in retirement withdrawals significantly reduce the long-term value of a portfolio?
Sequencing risk
What risk occurs when investments marketed as environmentally or socially responsible are not genuinely sustainable?
Greenwashing risk
What risk arises when changes in interest rates affect the attractiveness or returns of different investments (e.g., fixed vs variable rate)?
Interest rate risk
What risk is the possibility that a borrower, bank, or bond issuer fails to meet its financial obligations?
Credit risk
What is the most important strategy for reducing investment risk?
DIVERSIFICATION
