Many investors hope to make a lot of money with very little risk to their principal, but there is an inverse relationship between risk and return. Most investments fluctuate 50 percent in value over the short term. Some principal volatility is normal in a sound investment plan.
Any investment involves some risk.
But if you have educated yourself to be able to recognize and evaluate the risks you may encounter, you will be better able to balance your investment objectives and tolerance for risk. The price of stock may fall, an industry may decline, the company may go out of business, and weather or political conditions may cause you to lose part or all of your investment. Never invest more than you are prepared to lose. Interest rate risk. There is usually an inverse relationship between bond and stock prices and interest rates.