Every type of investment comes with a substantial risk of losing value. You could lose all or part of your investment if you choose a poorly performing investment. Even if you purchase the investment through a bank, you still may lose the principal amount of your investment. This is because securities are not federally insured. If you invest all of your money in stocks, you face a substantial risk of losing it. Even if the investment was made at a good price, it may be worthless.
In addition to losing value, every investment has some risk. If market conditions turn sour, stocks, bonds, mutual funds, exchange-traded funds, and insurance policies can all lose their value. Even safe investments, such as bank or credit union CDs, can lose value due to inflation. Because these investments earn below inflation rates, they may not keep pace with the cost of living. While risk is inherent to all investments, it is possible to minimize it by employing certain strategies.