How will you respond when the value of your investment declines?
The answer to this question reveals your comfort level with risk. Every investment, including cash, is attached to risk.
When you “save” in a bank account, your return is tied to short-term interest rates. Inflation, when higher
than interest rates, can erode the purchasing power of your savings. When you invest in the stock market, your return is likely to
fluctuate and therefore not guaranteed. Stock prices are determined by investors based on their opinions on a variety of factors.
One of the benefits of a mutual fund is diversification, which could minimize risk. A diversified portfolio that is less volatile can help investors
reduce anxiety about losses and avoid emotional response to what is usually a temporary setback.
Nevertheless, mutual funds are exposed to the risks associated with their particular market and the strategies they employ.
contains information about potential risks of each product and should be read carefully before investing.