Knowing the different types of investment risk can help you cope with market volatility.

When was the last time you checked your retirement plan balance? If your balance was less than it was the last time you checked, you probably felt a bit of pain. Everybody does. Where exactly does that pain come from? It’s called risk, and all investments involve some degree of risk. In finance speak, risk refers to the degree of uncertainty and/or potential financial loss inherent in an investment decision. In general, as investment risks rise, investors seek higher returns to compensate themselves for taking such risks.

Investment products have different risks and returns. Differences include how readily investors can get their money when they need it, how fast their money will grow, and how safe their money will be. Let’s take a look at the many faces of risk we all experience as investors. While it may not take the pain away, it will at least help you cope a little better with market volatility.

A look back at 2021 thus far.

The year in brief. 2021 has been a year of economic and business recovery – a recovery tempered by the delta variant of the coronavirus, but a rebound nonetheless. 

Stateside economic indicators were largely up this year, some strikingly so. As more industries opened up fully in the first half of the year, pent-up consumer demand for goods and services grew quickly, but supply could not keep up in many sectors. Inflation made a comeback, and analysts were divided on whether it would decline in the near term or persist at elevated levels. Cheap oil became a memory, along with cheap gas. Congress spent much of the year trying to compromise on a multitrillion-dollar infrastructure bill, and more recently started working on debt limit and budget legislation. Around the world, supply-chain issues and ongoing vaccination efforts tempered global growth.

Aspects of your financial life to review as the year draws to a close.

The end of the year can help remind us of last-minute things we need to address and the goals we want to pursue. To that end, here are some aspects of your financial life to think about as this year leads into the next. 

Keep in mind, this article is for informational purposes only and is not a replacement for real-life advice. Make certain to contact a tax or legal professional before modifying your tax strategy. The ideas presented are not intended to provide specific advice.