In addition, investors need to be aware of other risk exposures that they may encounter when investing including:
- Inflationary/Purchasing Power Risk:
The probability that the value of the investment will not keep pace with inflation.
- Market Risk:
The probability that the market for an investment will weaken and the investment will be sold for less than its original value. For example, if an equity investment is liquidated when the stock market is experiencing a downturn, the investor may receive less than originally paid for the stock.
- Interest Rate Risk:
This refers to the risk of fluctuation in the market value of fixed income investment products, due to interest rate movements. Typically, interest rate risk is higher for fixed income investment products with longer maturities/duration. For example, as interest rates go higher, bond prices get lower, whereas lower interest rates result in higher bond prices.
