Understanding Investment Risk

What is investment risk?

Investment risk is the possibility that actual outcomes differ from expected outcomes. Investment values may rise or fall.

Common risk types

Different products and markets involve different risks.

• Market volatility
• Inflation risk
• Interest rate changes
• Currency movements
• Liquidity risk
• Provider or product risk

Diversification

Diversification is commonly discussed as a way to spread exposure across different assets, but it does not remove all risk.

Long-term assumptions

Long-term calculators often rely on assumed rates of return. Actual results can be materially different.

Important caveat

This page is general educational information only. It is not financial, investment, legal, tax, accounting, medical, or regulated advice. Rules, products, fees, taxes, and protections vary by country, provider, and personal circumstances.