Taken by itself, the word “risk” sounds negative. But broken down into what it really stands for in terms of investing, it begins to be a little more manageable. By understanding the different types of investment risks and keeping an eye on your investments, you may be able to manage your money more effectively. Remember, strategic investing doesn’t mean “taking chances” so much as “making decisions.” Long-term investing and diversification may be some of the most effective strategies you can use to help manage investment risks; however, neither guarantees against investment loss.
Types of Investment Risks
The main risk from inflation is the danger that it will reduce your purchasing power and the returns from your investments. If your savings and investments are failing to outpace inflation, you might consider investing in growth-oriented alternatives such as stocks, stock mutual funds, variable annuities, or other vehicles.