There are many financial risks that investors want to protect themselves from (inflation risk, interest rate risk, market risk, etc).
But there are three risks that most investors don't take into account and I believe not doing so can quickly get them into trouble.
I call them control risk, access risk and flexibility risk. Let me explain.
When I refer to control risk, I'm talking about your ability to exert control over your money.
Since you are the one that will have to reduce your standard of living if something happens to your nest egg, it's vital that you retain control over it.
problem with annuities, life insurance and other packaged products is that you immediately lose control over your money.
You are ceding control to someone else.
They are the ones in the position of power because they get to decide what is done with your money.
They use contracts that specifically limit your control and give it to them.
Why would you ever want to surrender control over the most important financial asset you will ever have?
It doesn't make sense!
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