Risk

Question 1

Risks associated with nicks european equity unit trust

Answer 1

• likely to be volatility
• may be unsuitable to generate income in retirement
• outside of janes ATR
• legislation/ taxation risk leading to increases in tax needed to be paid
• political and market risks can have negative effects on growth
• FX risk
• diversification risk
• vast majority in equity

Question 2

Key risks associated with cash holdings

Answer 2

• inflationary risk
• spending power may be eroded over time
• interest rate risk
• rates could remain low/fall
• taxation
• tax rules may change and increase tax on interest