Definition
The chance that your investments might lose value. Balancing risk and reward is key to a successful investment strategy.
What to consider
- Keep your investments diversified to manage risk.
- Regularly review your portfolio to ensure it aligns with your goals.
- Adjust your holdings as your financial situation changes.
Real world scenarios
- After determining his risk tolerance, Preston invests conservatively with bonds and stable blue-chip stocks.
- Riley accepts higher risk, leaning into tech growth stocks that have greater volatility but potentially bigger gains.
- Sasha’s risk mitigation strategy includes spreading funds across different sectors and regularly reviewing each asset’s performance.
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