Investment risk is a near and dear concept to all investors.
In the world of finance, risk is represented by a number that is calculated based upon the price volatility of the underlying security..
However, we like to think of risk as the likelihood that an investment incurs losses instead of delivering its expected return.
As it stands, risk is ubiquitous and comes in many forms for different types of investments.
With equities, there is a risk of falling share prices, reduced dividends and/or share buybacks.
With bonds, there is a risk of the borrower defaulting on its obligations.
With real estate, there is vacancy and replacement cost risk.
Here are three salient risks that investors should be aware of in 2023:
1. Interest rate risk
It is no secret that the Federal Reserve has hiked interest rates aggressively to rein in inflation.
The current benchmark rate stands at between 4.25% to 4.5%, representing a rise of four percentage points since March 2022....