Market risk
The value of investments can decline because of broad economic, political or market events.
Returns are uncertain
Risk is more than how a market decline feels.
Your ability to absorb loss, your reaction to uncertainty, your timeline and the purpose of the money all belong in the conversation.
Concentration risk
Owning many holdings does not guarantee diversification if they depend on the same company, sector, country or factor.
Liquidity risk
An investment may be difficult or costly to sell when money is needed.
Inflation risk
Returns may not preserve purchasing power over time.
Currency risk
Exchange-rate movements can affect the Canadian-dollar value of foreign investments.
Behaviour risk
Fear, overconfidence, urgency and performance chasing can undermine a plan.
Diversification spreads exposure; it does not prevent losses.
Consider how holdings overlap across companies, industries, regions, currencies and investment types. A diversified portfolio can still decline, and historical outcomes do not predict future results.
A useful question is not only “How much could this make?” but also “What could cause it to lose value, and what would I do then?”