Investment Risk

Investment risk refers to the potential for loss or underperformance in an investment, relative to the expected return. It encompasses various uncertainties that can affect the value of an asset, including market volatility, economic changes, interest rates, inflation, and specific risks related to individual securities or sectors.

Investors face different types of risks, such as systematic risk, which is linked to overall market movements, and unsystematic risk, which pertains to individual investments. Understanding investment risk is crucial for investors as it influences their decision-making, portfolio management, and overall investment strategy. By assessing and managing these risks, investors can better align their risk tolerance with their financial goals.