Investment Risks

Risk is a word that many people wish to avoid; however, it is a word that is used quite often in the world of investments. Several types of risk exist, and several strategies exist to offset these risks.

Types of Risk & Characteristics

Inflation 
* Lessens purchasing power and return on investment
* Offset by investing in stocks, variable annuities, stock mutual funds, etc.

Interest Rate 
* Interest rates up = Fixed-income investments fall
* Interest rates down = Fixed-income investments rise

Economic 
* Extended appreciation through stocks of well-grounded companies
* Earnings are affected by the economy

Market 
* Poor market conditions = Securities suffer
* Offset with long-term investing

Specific 
* Riskiest growth fund
* Company-specific events affect company-issued stocks
* Diversification offsets specific risk

This information is presented to educate the reader and does not constitute professional tax and legal advice.
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