What Should You Know About Investment Risk?

When you invest, you incur risk – there’s no avoiding it. But the concept of “risk” may be more expansive than you realized. And by understanding the different types of investment risk and how these risks can be addressed, you can improve your skills as an investor.

The most common perception of investment risk is simply the risk of losing money. When you invest in stocks and stock-based vehicles, such as mutual funds, there are no guarantees that your principal – your initial investment amount – will be preserved. Generally speaking, if you hold stocks or mutual funds over a period of years,...