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Risk

Last Updated: February 20, 2007 | Related resource areas: Personal Finance

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All investments involve some risk because the future value of an investment is never certain. Risk, simply stated, is the possibility that the actual return on an investment will vary from the expected return or that the initial principal will decline in value. Risk implies the possibility of loss on your investment.

Factors which affect the risk level of an investment include:

  • Inflation
  • Business failure
  • Changes in the economy
  • Interest rate changes.

More information:

Financial Security: Saving and Investing, glossary

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