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Financial Risks All Investors Need to Know!

Aug 4th 2014 at 3:23 AM

Risks come with investments; they go hand in hand. Financial planners offer the LEAST risky options as the safest, but no option is completely without risk. So when you’re investing in anything, whether it’s the best indexed annuities, stocks, mutual funds or bonds, you must always accept the risk factor.

But how do you know what is the best investment option for you? Understanding the kinds of risks that could impact the performance of your portfolio could put things into perspective for you. Let’s take a closer look at them:

Market Risks

Also referred to as Systematic Risks, Market Risks are affected by the overall economic condition of the county and the world. Major changes could cause your investment value to fluctuate. For example, if you invest in real estate and the opinion of market shifts to say that your real estate is overpriced, the value of your property could fall.

Business Risks

This is the kind of risk that is related to a particular type of security. Business risk is the possibility of an issuer of an investment security, such as stock, to go bankrupt. It can be avoided by the process of diversifying the portfolio because you segregate and minimize risks.

Inflationary Risk

Also known as purchasing power risk, this risk is the ability of the value of an asset to depreciate due to high rising costs; something that normally could’ve been purchased with your $10 stock is now available for $20, while the value of the stock still remains the same, if not declined. Your financial planner will take the inflation rate into account when creating your portfolio.

Liquidity Risk

If an investor has limited possibilities to buy or sell a security, it is said to have high liquidity risks. An example would be investments in real estate. Speak about this in detail with your real estate planner.

Get professional advice on your investments before you purchase any security.

Looking for the Right Retirement Plan Services in Northbrook?

Kollar Wealth Advisors is a company that specializes in financial advisory and asset protection services. In addition to that, they offer other services ranging from retirement planning, portfolio management, investment advisory services, estate planning, wealth transfers, etc. They come with over two decades of experience and a network of highly trained professionals.

Visit Kollar Wealth Advisors and ask for their free Second Opinion Analysis.

Website:

http://www.kollarwealthadvisors.com/

Address:

707 Skokie Boulevard

Suite 600

Northbrook, IL 60062

Phone Number:

(847) 291-4300

 

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