The Biggest Risk for Investors

Posted on September 3rd, 2013 · Posted in News

It’s a risky world that we live in, especially for investors.  Whether it’s shares, property, superannuation or even cash in the bank, the chances of losing money seem to have magnified in recent years.

The GFC, European collapses, free-spending politicians, tinkering with superannuation rules – it’s enough to drive you crazy with indecision.  A new paper by Hewison Private Wealth says it is not possible to avoid all risks – but you do need to understand them. It outlines 10 main risks that investors face, including:

* Inflation risk, where rising prices erode spending power;

* Currency risk, which can affect your investments (not to mention your travel plans);

* Market risk, the ups and downs of investment markets;

* Interest rate risk, where rate cuts or rises can reduce your returns or cost you money;

* Legislative risk, the changes to laws and regulations, and

* Diversification risk, when too many eggs are in one basket.

All this can affect investors but there is another, the biggest risk of all: the risk of doing nothing because you’re freaked out by all the other risks.

If you really want to improve your financial position, you have to accept some risks. Leaving all your money and super in government-guaranteed bank deposits means your wealth is actually going backwards after income tax and inflation.  Do your research, take small steps and always have a long-term view. Remember that no risk probably means no reward.

Infinity Partners Finance is here to help you Strengthen Your Financial Future.  Contact us today for a FREE finance review.  What have you got to lose?