Investment Updates
Identifying Investment Risk And Coping With It
Published Monday, March 24, 2014 at: 7:00 AM EDT
Are you a risk-taker? To realize rewards, you usually have to take some risks, especially when it comes to finances. But beyond understanding that investment risk and reward go hand in hand, it’s important to know how they relate. What is the nature of risk, and how can you handle the different kinds of risk that could affect the performance of your investments?
What is the nature of risk? For many investors, risk is associated with the inherent volatility of the equities markets. You run the risk that your investments will perform worse this year than last year or worse than you anticipated or worse than the markets as a whole.
Risk means you have something to lose—the money you’ve put into a particular investment or the money you might have made if you had made different choices. You also could run the risk of throwing good money after bad, of buying more of something when the price is low only to see the value fall further.
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