Comments on: Understanding Investment Risk Types

By: Shaun Rosenberg

Shaun Rosenberg — Sun, 18 May 2008 21:25:25 +0000

I will never understand why people will put there money in the bank and earn 2% a year from that. Worse then that some people just store their money and get no interest on it.

Inflation is real. One of the worst risk is risking not to invest.

By: Retirement Advice

Retirement Advice — Sun, 18 May 2008 06:22:34 +0000

At the end of the day, there is only one real risk; the potential of the permanent loss of capital. You can invest all of your energy worrying about inflation, manager underperformance, reinvestment or “market” risk…but as you allocate capital, the only issue that the worlds best investors consider is “what is the risk of permanent capital impairment.”

By: Tyler

Tyler — Wed, 14 May 2008 13:12:04 +0000

Jim,
Being from Canada, I have been noticing that the largest risk for my portfolio over the past 5 years has been currency risk. The Canadian “loonie” has gotten much stronger and has increased the value of my Canadian holdings, but has crushed my US holdings.
On a side note, I went to college and took out my student loans in Canadian dollars when the Canadian dollar was worth about $0.65 USD. When I paid my student loans back, the Canadian dollar was at $0.88 USD. How’s that for an expensive education! I got hosed.

By: Sentient Money

Sentient Money — Wed, 14 May 2008 12:58:30 +0000

Everyone should know their personal tolerance for risk after the last 8 months. The market has highlighted it very well.

Another good thing to note is that inflation risk has increased greatly. The current inflation number of 4% is vastly understated, as it does not have the correct proportions of gas and food in the calculations. I have seen economists, who I respect greatly, suggest it might be around 7-8%. That’s a lot of risk.

Good post.