What is risk?

Risk is the probability that an actual return on an investment will be lower than the expected return.

Financial risk can be divided into the following categories: basis risk, capital risksovereign riskdefault riskdelivery risk, economic risk, exchange rate riskinterest rate riskliquidity riskoperations risk, payment system risk, political riskrefinancing riskreinvestment risk, counterparty risk and underwriting risk.

Your challenge.

Each investment you make has a desired income or growth outcome requirement.

Many institutions typically offer you one portfolio or one type of product to meet very different financial needs.

Nelson Life firmly believes that each investment is made under different conditions – one size does not fit all.

Are you taking advantage of the opportunities in both the traditional and alternative capital markets to meet your personal financial & investment needs?

Supporting your goals

Nelson Life believes investment management is more than finding the next great investment opportunity.

We believe it is about ensuring that your money is working hard to achieve the financial goals you have.

Nelson Life investors take advantage of:

  • Customized portfolio construction
  • Deposit investment options
  • Asset allocation and style diversification
  • Multi-managed portfolios
  • Protected investment opportunities
  • Different tax structured investments – DIRT, CGT and Gross Roll Up
  • Alternative investments – such as solar, wind energy, commodities ..
  • Tax-efficient investment
  • Transition strategies – for estate planning, retirement and lifestyle changes
  • Wealth preservation strategies

Why is risk profiling important?

Risk profiling is a process that allows Nelson Life to closer understand your propensity to accept risk.

We have several investment risk profiling tools available and constantly review the options available in the market to improve our calibration.

We take care to identify your

  • Risk capacity : The risks you can or cannot afford to take.
  • Risk required : The risk associated with the return required based upon personal goals and your current position.
  • Risk tolerance : The level of risk you are comfortable with – psychological characteristics .

Where there is a mismatch between risk required, risk capacity and risk tolerance – Nelson Life will guide you through the trade-off decisions that are required to find the best solution for you.

Types of risk.

Investment risk Volatility of your returns over a given period.
Market/Systemic risk General risk of being in one particular investment market.
Specific risk Risk that can adversely undermine the value of your investment e.g. Credit Crunch and value of Bank of Ireland, AIB and Anglo Irish Bank shares.
Manager risk Professional managers frequently get investment decisions incorrect and these can impact on the value of your fund – other managers may not make the same calls.
Currency risk Non Euro denominated investments may fall or rise in value based upon the Euro value – this can have big effects on the value of your investment.
Gearing risk Some funds may borrow and this can both magnify losses and gains.
Liquidity risk Some funds may not allow access to cash for a fixed period or until assets can be sold – such as property.
Inflation risk Is the risk that your investment will not produce a “real” investment return – some deposits, bonds, trackers and savings certificates may only yield back a return over time that is lower than inflation
Interest rate risk Interest rate changes can have an adverse effect on the income you receive from an asset – for example annuity rates are currently at historically low levels.
Default/ credit risk Risk that the company or government that owes money to the investor cannot pay pack money in full.
Counterparty risk

Some or ll of the promised return of an investment may be dependent on a third party. If that third party fails to return portion or any capital then investment value may be reduced or zero. Target Return risk. Some projections may be based upon an expectation of past performance. Investment my not yield the targeted return e.g. deposit rates projections using 6% to 8% per annum growth rates – not realistic.

More Questions?

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