Last month we discussed how much risk you could tolerate depending on your life situation. This month we will consider other risks to which each of us are exposed:
Market Risk: We all have experienced the effects of a volatile market and the havoc it can cause both financially and emotionally. Since mid 2008 the market has experienced “saw tooth” rates of return and many have fled the equity markets in an attempt to avoid this volatility and the risk that comes with it. For those that were in the process of retiring and were still in equity funds, many had to put retirement on hold.
Business Risk: It has been estimated that those who own and operate businesses have 50% or more of their wealth tied up in the venture. This can be devastating to a retirement plan or financial security if the business should encounter financial difficulties or, in the extreme, fail.