Be alert but not alarmed
Risks come in many shapes and sizes, and recognising them can help you protect your precious assets.
Self-inflicted or behavioural risk
These are sins of omission (things you failed to do) and sins of commission (things you chose to do, which led to bad outcomes).
There are many examples of self-inflicted risk. I hope that knowing about them can save you from making similar mistakes. A classic self-inflicted risk is putting all your money into one investment, particularly if you do so without looking into it carefully – like the man who invested his life savings of $660,000 in a company purely on the grounds of its enticing newspaper advertisements and lost the lot.
It can also be that you draw down too quickly on your capital, reducing its ability to last as long as you do. When I was in private practice as a financial planner we commonly heard of situations where retirees drew aggressively on their capital to help their children out of a problem, and so put their own assets at serious risk.
EXAMPLE I received an email from a man who told me that he and his wife had gone tenants-in-common
