Sequencing risk is when the order and timing of your investment returns are unfavourable. This risk is hidden to some degree and is a subset of market risk / volatility.
As author and financial adviser Nick Murray says: you should never have so much money invested in something that you will either make an absolute killing out of it – or be killed by it.
Junk bonds are frequently advertised as “an attractive alternative to term deposits”. But junk bonds do not guarantee you a return, and they are very high risk. They often claim to have a 5% return – which is ludicrous in itself when you think about standard interest rates. And sometimes, carefully selected terminology confuses people into thinking junk bonds are actually like term deposits offered by banks. They’re not.
So, what is ‘the give-up, get-back ratio’? Another way to phrase it is: what can I give up today to get back something better later on? You guessed it – we’re talking about investing your money. And with your money in the right place, it will grow yearly (assuming you don’t withdraw from it) and eventually, you will get back much more than you put in.
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There’s no such thing as a free lunch. An oldie but a goodie – especially when it comes to tax deductions. Often you hear people justify buying a product or service because it’s a ‘tax write-off’ – and while that may be true, it still comes at an expense. So while the purchase might reduce your taxable income, the funds to purchase still have to come from somewhere. And that somewhere is your (or your company’s) pocket.
First of all, thank you to Mike for listening to our podcast, and for sending us your question. We really enjoyed preparing for this complex podcast and we dug deep to analyse the facts and figures associated with it.
One of the biggest fears our clients have is that despite working hard to save their desired $1.5 million for retirement, they will lose that amount in a GFC-type scenario.
We recently attended a 3-day business course about diversity and how it affects decision-making. But before we explain the relationship between those two, let’s look at a different relationship: that of a young Michael Hogue, back in 2011, when he was courting his now-wife Suzie.
Being liquid describes how quickly someone is able to get to their cash. When we talk about the risk to liquidity, we mean any instance where the investor can’t buy or sell an investment as and when desired. In other words, they are unable to access cash when they need to.
Dallas Davison, Michael Hogue and Ali Hogue.