As the economy continues to be unstable, more people are looking into different methods to create a passive income stream.
This, paired with the rise in automated systems, has led more people to look at investing as part of their retirement plans, or even to help them make ends meet at the end of the month.
Of course, investment on its own is never without risk, and as 2026 approaches, more risks seem to be appearing. So, if you are new to the world of investing, or even if you are a dab hand at it, here are the top predicted risks to be aware of going into 2026.
AI Overinvestment & Valuation Risk
A core risk to be aware of is that AI capital spending has become a bit overstretched. This has created an overinvestment in AI infrastructure, which could lead to poor returns. Even though AI promises investors productivity and growth in investments, there is concern that it will be able to deliver on these, which could put many investors in danger. If you are concerned about your investments, you should speak with a wealth management specialist to discuss strategies.
Sticky Inflation & Monetary Policy Risk
If the labour market strengthens and wage pressure builds, there is the potential in 2026 for inflation to re-emerge as a threat to investments. It is predicted that high levels of global government debt may limit fiscal flexibility, which in turn can cause the risk to banks and their ability to cut rates, thus forcing them to keep their rates higher. This will cause rates to remain high in investing, making a positive return less likely.
Rising Debt Risk
Debt is an issue that is continuing to grow and is impacting everything from lending to credit risks. As companies refinance, credit will be harder to obtain, which will cause more defaults and stress to the public. With rising borrowing costs, a credit event could cause an issue in the investment market, depressing investment returns and making it less predictable and profitable to invest.
Geopolitical & Trade Fragmentation
Another risk to investments is trade tensions. Tariffs, even if they have cooled, remain a downside risk and, as global fragmentation continues, supply chains will likely be impacted. Mix this with the higher rates of geopolitical shocks that are predicted, and you have the perfect storm for investments costing more, having limited growth potential, and market dislocation.
Climate-Related Risk
The economic, financial, and literal climate all play a part in the stability of the global investment market. Everything from weather disasters to liabilities and systemic changes with policies can damage assets and, as liabilities grow, more investment companies may face legal costs as well as reputational damages. Climate risks usually equate to larger losses for investors and, in the current and predicted economy, it is more likely that they will hit multiple industries at once.
If you want to invest in stocks, want to get a passive income stream going, or simply want to save for retirement, it is wise to seek out the advice of a financial advisor. They can help you to mitigate the risks mentioned above as well as devise a plan that will help you meet your financial goals in the new year.