What risks will I be exposing myself to by investing?

There are definite risks to investing, but educating yourself can drastically limit your exposure to these risks.

  • When the rate of return is great, the risk usually is as well. Depending on the situation, you may put yourself at risk to lose all of your initial investment.
  • There is a great difference in the liquidity of assets. Some can be sold in moments, and some may take quite a bit of time – take this into consideration when buying. Some may also have penalties for selling early or maturation dates.
  • Investing in a company with little or no history is much riskier than those with a proven track record.
  • The previous performance of a stock doesn’t necessarily mean that the stock will follow that pattern.
  • Pay attention to news that pertains to the companies that you hold, information that is released about the companies in the news can seriously affect the values of the investments you hold.

Posted in: Developing a Financial Plan