What Are the Risks & Rewards of Stock Investing?

Investing in stocks offers risk and rewards. When setting out to invest, be aware of how much you are willing to invest and to risk. Knowing the risk can help reap rewards.

Considerations

It is important to take age, time frame, financial assets, needs and risk tolerance when investing. Rewards do not always come quick and easy.

Significance

There is no risk-free investing. Holding an investing through up and down markets may be profitable or not.

Diversification

Diversification can offer it own rewards and limits. Allocating funds in several investments can limit risk but it can also narrow rewards.

Trade or Invest

Investing for the long term used to be optimal. Today's markets are more volatile, more risky, and also more rewarding. Trading offers many short-term rewards while also being risky.

Economy

Interest rates, real estate sales, unemployment, global unrest and political elections all have an impact on investing. Good news is usually good for the markets. The media plays a big part in the stock market's movements and investments.

Uncertainty

In times of uncertainty, the markets can fall or falter. This may offer the opportunity to invest in alternative investments, such as gold, silver, oil or currencies.

References

• American Funds: The risks and rewards of investing
• Stock Market Investors; Investment Opportunities in Times of Financial Crisis