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Market Averages – Investment Returns Investing has its risks. Investing in the equities market has its risks and volatility. Every investor must assess his/her ability to live with both overall risk and seasonal volatility. According to investment broker Charles Schwab & Co., Inc. since 1926 equities have generated an average of 10.7% annual return. But that […]
Specific risk involves any occurrences that may affect only a particular company. For example, the death of the founder, political developments, or heavy debt can affect a particular firm adversely. Some huge companies that have been around for a very long time, even with great products and unsoiled reputations, have […]
Company Risk If a company’s stock value decreases due to financial difficulties, this creates an instant company risk. Internal factors such as inefficient production and poor management or external factors such as problems with the industry, the economy, or trade can contribute to company risk.
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Market risk is the risk associated with market fluctuations that can depress the value of particular investments. All stocks and bonds can be affected by downturns caused by fraud, war, or calamity. Additionally, certain types of investments can experience a major downturn should there be a slowdown in a specific industry or category of […]
Interest Rate Risk
Interest rate risk occurs when changes in interest rates cause the value of certain investments to decrease. For example, when interest rates rise, the market value of fixed-income securities, such as bonds, declines. Bond investors hate inflation because it erodes the value of bonds’ fixed interest payments. Investors are locked […]
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