Successful investing isn’t about eliminating risk—it’s about understanding and controlling it. For professional money managers and individual investors alike, knowing how to navigate the complex world of investment risk can mean the difference between growing and protecting wealth and suffering devastating losses.
This brief guide examines the 20 most significant risks to investment portfolios today. From market volatility to cybersecurity threats, we’ll explore each risk, providing real-world examples and practical strategies and tactics to help you protect and grow your wealth.
By implementing evidence-based risk management techniques aligned with your personal risk tolerance and financial objectives, you can build resilience into your portfolio and confidently pursue your long-term investment goals—even during periods of market uncertainty.
Risk Type | Risk Control Strategy |
---|---|
Market Risk | Align portfolios with investor risk tolerance. Allocate across asset classes including stocks, bonds, cash equivalents, and liquid alts. |
Interest Rate Risk | Align fixed income duration with investor time horizon and world view. |
Concentration Risk | Avoid asset and sector over-concentration. |
Credit Risk | Own high-quality investment-grade bonds. |
Liquidity Risk | Limit exposure to non-marketable private assets. |
Inflation Risk | Invest in inflation-protected bonds. |
Style Risk | Diversify across investment styles like value, growth, small-cap, and large-cap. |
Correlation and Volatility Risk | Use diversification and stress testing to manage correlation spikes and volatility; consider low-correlation assets (e.g., TIPS, Gold, Listed Options). |
Sequence of Return Risk | Implement withdrawal strategies and maintain liquidity buffers, especially for retirement portfolios. |
Cybersecurity Risk | Implement two-factor authentication (2FA) on all financial accounts, review account statements monthly for unauthorized deposits or withdrawals, diversify digital exposure, and work with firms adhering to strict data protection standards. |
Maintaining a well-diversified portfolio aligned with an investor’s risk tolerance and objectives helps minimize potential risk. It’s equally essential that a competent money manager monitor and adjust portfolio asset allocation as needed. Decision-making should be grounded in evidence-based strategies and robust financial theory, not emotions. Be wary of any advisor who claims an investment has no risk; such claims may warrant considering an alternative advisor.
In summary, partnering with a qualified professional can instill confidence that your portfolio is resilient, aligns with your goals, and effectively manages risk. At Successful Portfolios, our expertise in constructing diversified portfolios and our disciplined risk management approach ensure your investments are positioned for growth opportunities while shielding against undue losses.
If you are concerned about the risks impacting your investments, call or text (727) 744-3614. Learn more about us and schedule a meeting below. Prioritizing and managing investment risk is the heart of what we do as professional money managers.
Successful Portfolios is an independent SEC-Registered Investment Advisor based in Clearwater, Florida.
Founded in 2010 by Parker Evans, CFA, CFP, and Joe Baer, APMA, we remain dedicated to guiding investors with complete transparency and the highest level of care.
As fee-only fiduciary advisors, we’re committed to helping you grow and protect your wealth.
Every financial journey is unique. Contact us for a free consultation, and let’s build a personalized investment plan for you and your family.
Parker Evans, CFA, CFP
President, Chief Investment Strategist
Joe Baer, APMA
Client Advisor, Portfolio Manager
Get an expertly tailored investment portfolio custom to your needs. Book a free consult to secure retirement income, reduce taxes, and safely grow wealth.
Get an expertly tailored investment portfolio custom to your needs. Book a free consult to secure retirement income, reduce taxes, and safely grow wealth.
Copyright© 2025 Successful Portfolios. Powered by PressGo Digital