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 into […]

Economic Risk   Economic risk can surface due to the fact that slow economic growth will be too weak to sustain or improve the return on a particular investment. For example, the price of shares in growth companies that require a strong economy to sustain earnings may fall during an economic slowdown. Again, as in […]

Inflation Risk   Inflation risk is the danger that inflation will reduce the purchasing power of your investment over time. Low-yielding investments such as savings accounts and money market funds may not earn enough to outpace rising prices.

Liquidity Risk   Liquidity risk means not being able to liquidate an investment quickly while keeping the original investment amount intact. This can occur with investing in bonds where the bond must be held to maturity in order for you to achieve a specific interest return. It can also be a risk should you invest […]

Unraveling the Mystery of Investing #1 Investing can be very complicated or very simple. It can be very successful or disastrous. There is risk with investing and there is risk in not investing. Investing can be very enjoyable or very distasteful. So in this chapter we want to give you some overall and well-rounded investment […]