- Market risk: This is the risk that the value of your investments will decline due to changes in the market. This can be caused by a variety of factors, including changes in economic conditions, changes in government policy, or changes in the competitive landscape for a particular industry.
- Volatility risk: Stock prices can be highly volatile, which means they can fluctuate significantly over short periods of time. This can make it difficult to predict the value of your investments and can result in significant losses.
- Liquidity risk: If you need to sell your stocks quickly, you may not be able to find buyers willing to pay the price you want. This can be particularly risky if you need to sell your stocks to meet a financial obligation, such as paying off a loan.
- Credit risk: If the company whose stock you own goes bankrupt, you may lose your entire investment.
- Fraud risk: There is a risk that you could be the victim of fraud, such as insider trading or Ponzi schemes.
- Political risk: Changes in government policy or political instability in a country can affect the value of your investments.
It’s important to carefully consider these risks before investing in stocks and to diversify your portfolio to reduce the impact of any one risk on your overall investment strategy.