Sijoitusriskeissä

Sijoitusriskeissä refers to the potential for financial loss when making an investment. This concept is fundamental to investing and understanding it is crucial for making informed decisions. There are various types of investment risks, each with its own characteristics and potential impact.

Market risk, also known as systematic risk, is the risk of losses due to factors that affect the overall performance of financial markets, such as economic downturns, political instability, or natural disasters. This type of risk cannot be eliminated through diversification.

Interest rate risk is the risk that changes in interest rates will negatively affect the value of an investment, particularly fixed-income securities like bonds. When interest rates rise, the value of existing bonds with lower interest rates typically falls.

Credit risk, or default risk, is the risk that a borrower will not be able to repay their debt obligations. This is a significant concern for bondholders and lenders, as it can lead to a complete loss of the principal invested.

Liquidity risk is the risk that an investor may not be able to sell an asset quickly enough at a fair market price. This can happen if there are few buyers for the asset or if the market for it is illiquid.

Inflation risk is the risk that the rate of inflation will erode the purchasing power of an investment's returns. If an investment's return is lower than the inflation rate, the real value of the investment decreases over time.

Diversification, which involves spreading investments across different asset classes, industries, and geographies, is a common strategy to mitigate some, but not all, types of investment risk. Understanding the specific risks associated with any given investment is paramount before committing capital.