Types of Risk presentation
Types of Risk
Investing involves market risk, including possible loss of principal and possible
fluctuations in value.
The Nationwide Group Retirement Series includes unregistered group fixed and
variable annuities and trust programs. The unregistered group fixed and variable
annuities are issued by Nationwide Life Insurance Company. Trust programs and
trust services are offered by Nationwide Trust Company, FSB, a division of
Nationwide Bank. Nationwide Investment Services Corporation, member FINRA.
In MI only: Nationwide Investment Svcs. Corporation. Nationwide Mutual Insurance
Company and Affiliated Companies, Home Office: Columbus, OH 43215-2220.
The Nationwide framemark and Nationwide Financial are service marks of Nationwide
Mutual Insurance Company.
© 2013 Nationwide Financial Services, Inc. All rights reserved.
PNM-2606AO.1 (06/13)
Budgeting
Types of Risk
Investment risk
Market risk/market volatility
Inflation risk
Interest rate
Foreign investment risk
Human error risk
What types of risk
will I face in my
retirement account?
Types of Risk
4
Investment risk
Types of Risk
5
Market risk/market volatility
Types of Risk
Market risk/market volatility
*Source for index data: Commodity Systems, Inc. as of October 2012
Past performance of an index is not an indicator of future results.
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Types of Risk
Inflation risk
First class stamp1
Movie ticket2
Car3
Year
cost
cost
cost
1985
$0.22
$3.55
$11,838
Current
$0.46
$7.93
$30.748
$0.76
$12.45
$45,604
20254
1 Postal
Rate Commission, usps.com (March, 2013).
2 National
Association of Theater Owners, natoonline.org (2011).
3 Autoblog.com
4 Assumed
(March, 2012).
inflation rate of 3.5%.
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Types of Risk
Inflation risk
Erosion of purchasing power
In 25 years $100,000 will be worth the equivalent of $47,761 today
assuming 3% annual inflation or $29,530 assuming 5% annual inflation.
Represents a 3%
annual inflation
$100,000
$86,261
Represents a 5%
annual inflation
$74,409
$80,000
$78,353
$64,186
$55,368
$60,000
$61,391
$47,761
$48,102
$40,000
$37,689
$29,530
$20,000
0
5
10
15
20
25
Source: Standardandpoors.com
(2011).
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Types of Risk
Interest rate risk
Types of Risk
10
Foreign investment risk
Types of Risk
Foreign investment risk
Represents when
the U.S. returns
outperformed
foreign returns
Represents when
foreign markets
outperformed U.S.
markets
Source: Standardandpoors.com (2011)
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Types of Risk
Procrastination
Human error risk
Timing the
market
Not
monitoring
account
Underestimating
your needs
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Types of Risk
Summary
• Investment risk is the risk of losing money on investments
• Market risk is the fluctuation of the value of investments
• Despite market downturns, the value of the market
has grown
• Inflation risk is the risk of your money being worth less
• Interest rate risk is the potential decrease in the amount
of interest you are earning on fixed income investments
• Foreign investment risk is the risk of foreign markets not
performing well
• Human error risks are those within your control
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Types of Risk
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