Page 14 - Talk of Tequesta - January '22

Page 14, The Talk Of Tequesta

FinanCial FoCus

What Should You Know About Investment Risk?

By Sally Sima Stahl

When you invest, you offer it at a “discount,” because no one will pay the full only own one type of asset, such as domestic stocks.
incur risk – there’s no price for your bond when they can buy new ones at a (However, diversification can’t guarantee profits or
avoiding it. But the concept higher rate. protect against all losses.) And you’ll also want your
of “risk” may be more You can help manage this type of interest rate risk portfolio to reflect your individual tolerance for risk.
expansive than you realized. by owning a variety of bonds with different maturities. By being aware of the different types of risk, and taking
And by understanding the When interest rates are rising, you can reinvest your short- steps to mitigate them, you can create a strategy that offers
different types of investment term bonds at the new, higher rates. And in a falling-rate the potential to help you achieve your important goals,
risk and how these risks environment, you can still benefit from your longer-term such as a comfortable retirement. And by doing so, you’ll
can be addressed, you can bonds, which typically pay higher interest rates. avoid the greatest risk of all: not investing for your future.
improve your skills as an Foreign or international investments also contain This article was written by Edward Jones for use by
investor. specific risks. When you purchase foreign stocks, you’ll your local Edward Jones Financial Advisor, Edward
The most common find that fluctuations in the value of currencies relative to Jones, Member SIPC.
perception of investment risk is simply the risk of losing the U.S. dollar can affect your returns. Also, international Edward Jones is a licensed insurance producer in
money. When you invest in stocks and stock-based investments may carry political risk, since some foreign all states and Washington, D.C., through Edward D.
vehicles, such as mutual funds, there are no guarantees governments and political systems may change in ways Jones & Co., L.P., and in California, New Mexico and
that your principal – your initial investment amount – will that work against businesses in those countries. To contain Massachusetts through Edward Jones Insurance Agency
be preserved. Generally speaking, if you hold stocks or these types of risk, you’ll want to maintain an appropriate of California, L.L.C.; Edward Jones Insurance Agency of
mutual funds over a period of years, and even decades, allocation of international holdings and diversify across New Mexico, L.L.C.; and Edward Jones Insurance Agency
you can reduce the likelihood of sustaining losses that regions. of Massachusetts, L.L.C.
could send your investments’ value to zero. Hopefully, Ultimately, your most broad-based defense against all Edward Jones, its employees and financial advisors
the value of your investments will rise over time. And types of risk is to build a diversified portfolio containing cannot provide tax advice. You should consult your
it’s worth noting that, since the Great Depression, U.S. U.S. stocks, international stocks, corporate bonds, mutual qualified tax advisor regarding your situation.
stocks have averaged 9.59% annual returns, according funds, government securities and other investments. Contact us at (561) 748-7600, Sally Sima Stahl, AAMS,
to Morningstar Direct, an investment research service. Diversification works because it helps reduce the impact 1851 W. Indiantown Road, Ste. 106, Jupiter, FL 33458.
However, past performance can’t guarantee future results. that market volatility can have on your portfolio if you
In any case, this type of risk is real, and it’s a factor to
consider when making your investment decisions. But you
can’t avoid all risk by avoiding stocks and putting your
money into other types of investments. Consider bonds, northErn notEs
for example. When you purchase a bond, you typically
receive regular interest payments and you get back your
initial investment when the bond matures, provided the
issuer doesn’t default. But if interest rates go up and you Snowbirds
want to sell your bond before it matures, you’ll have to

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Computer Install/Setup/Repair Sn owb i r ds ( a n Atlantic flyway. The bird species in these great bird-
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