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. 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

Investment risk

Market risk/market volatility

Inflation risk

Interest rate

Foreign investment risk

Human error risk

Types of RiskTypes of Risk

What types of risk will I face in myretirement account?

Types of Risk

4

Investment risk

5

Types of Risk Market risk/market volatility

Types of Risk

6

Market risk/market volatility

*Source for index data: Commodity Systems, Inc. as of October 2012Past performance of an index is not an indicator of future results.

Types of Risk

7

cost

$0.22

$0.46

$0.76

cost

$3.55

$7.93

$12.45

cost

$11,838

$30.748

$45,604

Year

1985

Current

20254

Movie ticket2 Car3First class stamp1

Inflation risk

1 Postal Rate Commission, usps.com (March, 2013).2 National Association of Theater Owners, natoonline.org (2011).

3 Autoblog.com (March, 2012).4 Assumed inflation rate of 3.5%.

Types of Risk

8

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.

$100,000

$80,000

$60,000

$40,000

$20,000

0 5 10 15 20 25

$86,261

$74,409

$64,186

$55,368

$47,761

$78,353

$61,391

$48,102

$37,689

$29,530

Source: Standardandpoors.com (2011).

Inflation risk

Represents a 3% annual inflation

Represents a 5% annual inflation

Types of Risk Interest rate risk

10

Types of Risk Foreign investment risk

Types of Risk

11

Foreign investment risk

Source: Standardandpoors.com (2011)

Represents when the U.S. returns outperformed foreign returns

Represents when foreign markets outperformed U.S. markets

Types of Risk

12

Human error risk

Not monitoring

accountProcrastination

Timing the market

Underestimating

your needs

Types of Risk

13

• 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

Summary

Types of Risk

14