Financial Risk

Three things that are risky: relying on our little brother to not rat us out for borrowing Dad’s car, eating a bunch of iffy Mexican food before a long road trip, and investing in the stock market.

That last one is what we call a financial risk, which is basically the possibility that our investments might lose money.

And folks, there is pretty much always the possibility that our investments might lose money. Even if Uncle Roy swears that he’s got a line on a surefire sure thing of an investment, it doesn’t mean there’s no financial risk. (In fact, knowing Uncle Roy, it probably means the opposite.) Markets change, economies change, and people’s willingness to invest changes. All of these things impact the performance of stocks and other investments. That’s part of what can make investing oh so profitable, but it’s also part of what can make it oh so dangerous and, in the worst cases, oh so bankrupting.