\n<\/p>\n
R<\/span>isk is a tricky word to pin down. Some people might say \u201criding a bicycle on the road is too risky\u201d<\/em> or \u201cI only have a cash ISA because shares are too risky\u201d.<\/em> Others will think those views are silly.<\/p>\n There isn\u2019t a clear line between risky and acceptable. It\u2019s a personal question of what you feel able to tolerate.<\/p>\n When it comes to investing, people fixate on the risks<\/a> of the stock market:<\/p>\n Those are all valid concerns. But they are far from the only risks out there.<\/p>\n What\u2019s more, if you spend too much time focusing on just one risk then you are liable to make poor decisions.<\/p>\n As The Investor <\/em>wrote years ago in The first law of thermodynamics and investing risk<\/a><\/em>:<\/p>\n \u201cInvesting risk cannot be created or destroyed. It can only be transformed from one form of risk<\/a> to another.\u201d<\/p>\n<\/blockquote>\n So what\u2019s risky for you? That\u2019s for you to decide.<\/p>\n Many kinds of risks are familiar both to bankers and to freelance writers penning personal finance articles.<\/p>\n The risk of not getting paid, for instance.<\/p>\n But there are also more specialist ones from the world of finance that are worth us thinking about. These include:<\/p>\n These map quite easily across to personal finance:<\/p>\n These risks all sound clear enough, at least in theory. But other risks are more subtle.<\/p>\n Maisie wants to retire early. She already has \u00a31,000,000 in her stocks and shares ISA \u2013\u00a0invested in a global shares ETF \u2013 and her budgeting software informs her she spends \u00a330,000 per year.\u00a0<\/p>\n After Maisie reads The Accumulator\u2019s<\/em> musings about the UK safe withdrawal rate<\/a>, she realises that she can retire immediately, withdrawing 3.1% of her portfolio each year.<\/p>\n Great stuff!<\/p>\n But then Maisie tells some folk about her excitement on the Internet.<\/p>\n \u201cAh,\u201d<\/em> says EternalPessimist28<\/em>, \u201cbut what if you live for another 50 years? You\u2019ll need a bigger portfolio.\u201d<\/em><\/p>\n \u201cAnd what if you need a care home?\u201d<\/em> interjects LondonStockBroker<\/em>. \u201cYou should be modelling for \u00a3100,000 spending per year after turning 80 to cover that.\u201d<\/em><\/p>\n Maisie sighs deeply, and goes back to work for another decade.<\/p>\n From a purely financial perspective, putting more years in might be the right move for Maisie.<\/p>\n But life is about more than just finances.<\/p>\n What if in the following decade, Maisie\u2019s partner passes away? Or she develops a health condition related to her stressful job?<\/p>\n Clearly it\u2019s not a good idea to retire without enough money invested. But waiting until you\u2019ve minimised market-related risks could well increase your exposure to these other kinds of risks.<\/p>\n Let\u2019s dive into a few of these less commonly discussed uncertainties.<\/p>\n\n
\n
Risky business<\/h2>\n
\n
\n
With enough risks, no target is high enough<\/h2>\n
Finding the balance<\/h3>\n
A little list of risks<\/h3>\n