{"id":9599,"date":"2023-08-07T02:55:43","date_gmt":"2023-08-07T02:55:43","guid":{"rendered":"https:\/\/isafespend.com\/investing\/video-what-do-you-need-to-know-about-market-risk\/"},"modified":"2023-08-07T02:55:43","modified_gmt":"2023-08-07T02:55:43","slug":"video-what-do-you-need-to-know-about-market-risk","status":"publish","type":"post","link":"https:\/\/isafespend.com\/?p=9599","title":{"rendered":"VIDEO: What Do You Need to Know About Market Risk?"},"content":{"rendered":"<div id=\"hs_cos_wrapper_post_body\">\n<p style=\"line-height: 1.75; text-align: justify;\"><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\">Today we\u2019re talking all about risk. Now we know that investing in the stock market, historically, has been a good way to build your wealth over time. But, as you\u2019ve probably heard before, there is a cost of admission to play this game. That cost is a risk. Listen very closely: <strong>your account value WILL go down sometimes<\/strong>. That\u2019s part of the process, as strange as that may sound. Think about it like this: if your account value never went down, it would be like a savings account at your bank. Are you getting really great long-term returns on your bank account money? Nope! No risk, no reward. So\u2026 what are these different types of market risk? Let\u2019s get into it.<\/span><\/p>\n<div class=\"hs-embed-wrapper\" data-service=\"youtube\" data-responsive=\"true\" style=\"position: relative; overflow: hidden; width: 100%; height: auto; padding: 0px; max-width: 560px; max-height: 420px; min-width: 256px; display: block; margin: auto;\">\n<div class=\"hs-embed-content-wrapper\">\n<p><iframe loading=\"lazy\" title=\"What Do You Need to Know About Market Risk\" width=\"768\" height=\"432\" src=\"https:\/\/www.youtube.com\/embed\/k8kaF0blR3s?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" allowfullscreen><\/iframe><\/p>\n<\/div>\n<\/div>\n<p>\u00a0<\/p>\n<h3>But first, what <em><u>is<\/u><\/em> market risk, anyway?<\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\">Market risk is the risk of seeing your account value go down, not because of anything specific to one company or sector, or mutual fund, but because the entire stock market goes down in value. Because this risk affects the entire market, it can\u2019t be avoided no matter how diversified your investments may be. Not fun, but part of that price of admission we talked about.<\/span><\/p>\n<h3>Okay, so what types of market risk are out there?<\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\">Let\u2019s go through some of the main ones so you can get a feel for what we\u2019re talking about.<\/span><\/p>\n<ol style=\"text-align: justify;\">\n<li><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\"><strong>Interest Rate<\/strong>\u2013 This one is more commonly associated with bonds rather than stocks. And the bond market can be pretty complex, but here is one little tidbit to impress your friends: Bond prices have an inverse relationship to interest rates, meaning that when interest rates go up, bond prices go down. And vice versa.<\/span><\/li>\n<li><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\"><strong>Inflation<\/strong>\u2013 Inflation is the cost of goods rising over time. Think about how much you spent on your first cell phone or your first car compared to what you have now. So while keeping money out of the stock market might feel safer, you might be taking on more risk than you think if you\u2019re not earning enough to keep up with the pace of inflation.<\/span><\/li>\n<li><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\"><strong>Currency<\/strong>\u2013 This is the possibility of losing money or purchasing power due to changes in exchange rates. If you\u2019ve ever traveled abroad, you might have had to deal with the exchange rate.<\/span><\/li>\n<li><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\"><strong>Liquidity<\/strong>\u2013 Liquidity is the ability to sell something when you need money. If you own shares of a huge company like Amazon or Apple and want to sell them, those stocks are traded so often that you\u2019ll almost never have trouble finding a buyer at a fair market price. But if you are an owner of a local business and need to sell it for cash, it might take time or you may have to sell it for a low price if you need money fast. That\u2019s liquidity risk.<\/span><\/li>\n<li><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\"><strong>Socio-political and Geopolitical<\/strong>\u2013There are socio-political issues such as war or corruption and geopolitical risk that, at a basic level, is where geography, economics, and politics intersect. More broadly, it\u2019s about how well different countries of the world get along &#8211; or don\u2019t &#8211; and how a certain nation\u2019s economic or foreign policy may affect other nations.<\/span><\/li>\n<\/ol>\n<h3>What Can you Do to Prepare for Market Risks?<\/h3>\n<p style=\"text-align: justify;\"><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\">Part of the battle is recognizing that risks will always be there and most of it is out of your control. You have to know and understand that there will be tough times when your account value goes down\u2026 and sometimes by a lot. But those are not times to panic; instead, those are times to take advantage of the opportunity to buy stuff when it is on sale. Consider putting your strategy down on paper. Jot down a reminder that you know your account value will go down sometimes, but you will not panic and stick to the plan. This will give you an advantage over your peers. You will have a better chance to build wealth compared to those who make the wrong move at the wrong time.\u00a0<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: tahoma, arial, helvetica, sans-serif;\">That\u2019s all for now. For more on investing or anything else in your financial life, check our MoneyNav. We hope to see you soon!<\/span><\/p>\n<p style=\"text-align: justify;\">\u00a0<\/p>\n<\/div>\n<p><script>(function(d, s, id) {\n  var js, fjs = d.getElementsByTagName(s)[0];\n  if (d.getElementById(id)) return;\n  js = d.createElement(s); js.id = id;\n  js.src = \"\/\/connect.facebook.net\/en_GB\/all.js#xfbml=1&status=0\";\n  fjs.parentNode.insertBefore(js, fjs);\n}(document, 'script', 'facebook-jssdk'));<\/script><br \/>\n<br \/>Read the full article <a href=\"https:\/\/moneynav.com\/blog\/market-risk-video?hsLang=en\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Today we\u2019re talking all about risk. Now we know that investing in the stock market, historically, has been a good way to build your wealth over time. But, as you\u2019ve probably heard before, there is a cost of admission to play this game. That cost is a risk. Listen very closely: your account value WILL<\/p>\n","protected":false},"author":1,"featured_media":9600,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[32],"class_list":{"0":"post-9599","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-investing","8":"tag-featured"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v20.12 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>VIDEO: What Do You Need to Know About Market Risk? | iSafeSpend<\/title>\n<meta name=\"description\" content=\"Today we\u2019re talking all about risk. Now we know that investing in the stock market, historically, has been a good way to build your wealth over time. 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