Before you go and make any major financial decisions, understand that you may be affected by factors over which you have no control. This volatility is known as “Market Risk.” This describes the possibility that the value of investments made in almost any sector will drop as a result of broad economic forces that are out of your hands.
What are some of these forces? Your finances may be affected by any of the following: changes in interest rates, currency exchange rates, or commodity prices as well as recessions, natural disasters, and political turmoil.
With national and global factors at play, is there such a thing as a completely safe place to put your money? People might tell you 401(k)s are risk-free, but unfortunately, they are not exempt from these factors. The funds within a 401(k) may be used to buy stocks, which can lose value without warning at the hands of market risk.
It’s of vital importance that you consider this key financial concept when making decisions about your financial future. While these risks cannot be eliminated, you can make decisions that best fit your situation and risk tolerance. To learn more, visit http://www.syncis.com/financial-concepts/