Definition of Term
What is Investment Risk?
All investments involve some degree of risk. In finance, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. There is no such thing as a risk-free investment. Stocks, bonds, mutual funds, and exchange-traded funds can lose value, even their entire value if market conditions sour.
And even conservative, insured investments, such as certificates of deposit (CDs), carry their own kind of risk: inflation risk (more on that later).
Because investment risk is a given, it is up to you to understand those risks so that you can confidently decide what to do with your financial assets.