Balancing risk and reward

All investments have risks. In order to figure out how to manage risk, you must first understand it. Investment risk – or the risk of losing investment value – comes in many forms, including:

Market risk, or the likelihood that a security’s value will move in tandem with its overall market.

  • Interest-rate risk, or the risk that the price of a bond will fall with rising interest rates.
  • Inflation risk, or the chance that the purchasing power of an investment will be eroded by inflation.
  • Credit risk, which refers to the risk that a bond issuer will not be able to repay its debt when the bond matures.

There is also the risk of investing too conservatively – not getting a high enough return to provide for your financial future. To effectively manage these elements of portfolio risk, you need to evaluate your personal investment goals and match these goals to your portfolio risks. Factors such as your investment time horizon and risk comfort level also must be considered. These will determine what kinds of and how much risk you are willing to take.

Retirement planning basics

Important Note:  Equitable believes that education is a key step toward addressing your financial goals, and this discussion serves simply as an informational and educational resource.  It does not constitute investment advice, nor does it make a direct or indirect recommendation of any particular product or of the appropriateness of any particular investment-related option. Your unique needs, goals and circumstances require the individualized attention of your financial professional.  We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

Equitable Financial Life Insurance Company (New York, NY) issues life insurance and annuity products. Securities offered through Equitable Advisors, LLC, member FINRA, SIPC.  Equitable Financial Life Insurance Company and Equitable Advisors are affiliated and do not provide tax or legal advice.

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