Investing involves risk, and as we’ve been working together, we’ve discussed your risk tolerance regarding your portfolio. But in the world of finance, risk can take many forms.
Here are a few types of risk that I look at when considering any potential investment:
- Business risk. How healthy is the company behind the investment?
- Market risk. How well will this investment handle the ups and downs of the market and any major economic changes?
- Inflation risk. Will this investment make sense if overall prices go up?
- Liquidity risk. If we need to get rid of an investment in your portfolio, is there a market for it?
- Interest rate risk. This risk entails an investment’s potential to lose value due to a change in interest rates.
Have questions about risk and how it affects your portfolio? Give me a call and we’ll get the conversation going.