Investment Risk

Liquidity

Liquidity measures the accessibility of your money, or how easily your investments can be converted into cash. If you need invested money during an emergency, lack of liquidity can be a concern.

Volatility

Volatility measures how much and how quickly the value of a security or market sector changes. The more volatile a security, the more its value fluctuates, and the more risky it can be.

Risk Types

The various risks you take as an investor can be broadly categorized as either systematic or nonsystematic. Systematic risk, or market risk, is characteristic of the entire market or a particular market segment. Nonsystematic risk is based on the performance of an individual company or groups of companies.

Bull & Bear Markets

Though investment markets are unpredictable, they tend to move in cycles of ups and downs. A bull market occurs when stock prices as a whole move upward for a prolonged period. Bear markets happen during periods of falling stock prices, and are generally said to occur when prices fall at least 20% from the most recent high.

Correlation

Some investments react similarly to changing economic and market conditions. In investment terms, correlation describes the extent to which various types of investments respond in the same way.