The word “risk” is a simple term that everyone is familiar with. When it comes to investing, risk takes on various forms.
Most investors are familiar with the disclaimers that disclose investment risk. You’ll see things like, “past performance is no guarantee of future results” and “investing involves risk including possible loss of principal” and more.
It’s critical for investors to understand the risks associated with their investments. It’s just as important for people to know their own unique situation and determine what their risk tolerance is. Some investors may tend to think that the only type of risk they’re exposed to is the risk of a stock market decline. In reality, investors are exposed to several different types of risk and need to understand them.
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