Investing Risks 2017-10-20T18:56:17+00:00

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The Dirty Dozen Investing Risks

#1 Inflation risk

It's known as Public Enemy #1 because it hurts all of us consumers.

As the prices of goods and services rise over time, our money buys less and less.

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#2 Company risk

This is the most obvious investing risk. Have we chosen a company that will succeed?

If it does poorly going forward, then we’ve not chosen wisely.

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#3 Economic risk

If investors are surfers, then the economy is the wave they're riding.

If the overall level of economic activity slows, it will likely impact the investments they hold.

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#4 Longevity risk

A difficult challenge investors face is not knowing how long they'll live.

There’s a chance they’ll outlive the “nest egg” they’ve built over their careers.

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#5 Legislative risk

Governments are always on the look-out to protect us from harm.

They may decide to restrict or prohibit the activities of a corporation you’re invested in.

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#6 Country risk

Sometimes the best investment opportunities require investing outside the U.S.

But, not all countries have strong investor protections. It’s critical to investigate the country within which you want to invest.

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#7 Systemic risk

To buy, hold and sell fairly valued investments depends on a functioning financial system.

In times of crisis, the financial system can freeze up, causing rippling harm worldwide.

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#8 Execution risk

Troubled corporations may announce bold plans to regain market leadership.

But, can they execute? Should investors believe they’ll achieve what they’ve announced plans to do?

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#9 Market risk

Normally functioning markets will fluctuate with supply and demand driven by buyers and sellers who come and go.

Investors who sell during market dips will lock in lower prices than they’d receive if they waited for a rebound.

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#10 Timing risk

What if you purchase an investment and soon after the corporation announces...

… terrible financial results or other bad news which makes the stock plunge?

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#11 Liquidity risk

What good is owning an investment if you can't get a fair price when trying to sell it?

The ability to sell an investment quickly for a fair price is known as liquidity.

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#12 Geopolitical risk

Hostile nations can fight each other while avoiding conventional warfare.

They do so by penalizing the corporations that are based in the country they wish to harm.

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#13 Interest rate risk

Investments that earn a set rate of interest lose value when interest rates rise.

The reason is that new investments will pay the new higher rate and be more attractive.

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Bonus: More risks!

We're not done. There several more risks investors may be subject to.

Let’s take a brief look at them.

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1 week 6 days ago

The only market left that is so enormous it allows the the biggest tech companies a chance at appreciable growth.

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1 month 5 days ago

When in the middle of a cash crunch, there's no shame in being creative.

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3 months 6 days ago

The tangled web Elon has weaved. Will Tesla reach a point where it is a viable automaker? There have certainly been too many twists and turns to keep track of.

Tesla

Investeach

4 months 1 week ago

So much going on. Who's paying attention? 100+ year old GE gets dumped from the 30-company Dow Jones Industrial Average. Apple passes $1 trillion in market value. Elon Musk floats taking Tesla private and casually throws out a value of $420 per share. Bezos' wealth tops $150 billion. GDP growth hits 4.1% in the quarter. Trump playing the tariff game, which is purely a game of chicken. What's most interesting to you?