Investments where the principal is not guaranteed. The investment you choose can lose value due to external circumstances. The investment thesis that drove the purchase might be early in terms of timing, or it might simply be wrong. If you stick to quality companies and buy them at the right price, most investments will prove to be profitable over the long term. However, susceptible to changes, the thesis can and will be proven wrong occasionally, and unknown unknowns will come to pass and make the plans obsolete.
This is why an investment policy statement and continuous communication with your portfolio manager is key. We are all humans with some blind spots – one of them is that our most recent experiences drive our decisions. When investing, this means that if you have had a good “run” in your investments, you might be willing to accept more risk. If your most recent performance is underwhelming, you will be more risk-averse.
How much risk you are willing to take on is based on your own circumstances and the current investment climate.