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Investment Risks

This is a general guide around the main risks associated with investing. During our advice process we look at ways to reduce your risks when investing.

 

Sequencing Risks

Sequencing risk refers to the timing in which investment returns occur. If negative returns happen early in the investment period (especially during retirement), it can have a disproportionate effect on the final outcome.

The impact of this can reduce the life of your retirement savings or may force you to draw capital earlier than planned.

 

Market Risks

Market risk involves the possibility that an investment will lose value due to overall market conditions that cannot be predicted.

This affects almost all types of investments and can cause significant volatility in your portfolio.

 

Concentration Risks

Concentration risk occurs when a significant portion of your portfolio is concentrated in a single asset or sector. For example, holding large exposures to individual companies.

Lack of diversification can lead to huge losses if the specific asset or sector performs poorly.

 

Asset Allocation Risks

Asset allocation refers to how you divide your investments among different asset classes, like stocks, bonds, and cash. The wrong allocation can mean that you have poor performance due to too many defensive assets, or not enough liquidity due to too many growth assets.

 

Mitigating These Risks

While these risks cannot be completely eliminated, they can be managed through various strategies:

  1. Professional Guidance: Collaborate with Willow Wealth Partners to tailor a strategy that suits your individual risk profile.
  2. Regular Reviews: Constantly monitor and review your investment portfolio to ensure alignment with your goals.
  3. Diversification: A well-diversified portfolio can help spread risks.
  4. Understanding: Ensure that you fully understand the investments and risks involved.

 

Please note that all investments carry risks, and past performance is not indicative of future results. Always seek professional advice tailored to your individual circumstances before making investment decisions.