Know the risks of investing--and not investing

Investing involves risk — and so does not investing. You should know how both these types of risk can affect your ability to reach your financial goals.

Let’s start with the risks connected with investing.

Whether you invest in stocks or bonds, there’s always an element of risk. Stock prices can fall for a variety of reasons — lower-than-expected earnings, a change in management, change in consumer tastes, and so on. And the prices of your bonds can fall when newer ones are issued with higher interest rates.

Even certificates of deposit carry some risk — the risk that you may not be able to reinvest your maturing CDs at the same rate.

By building a diversified portfolio, you can help manage investment risk, though diversification can’t guarantee profits or prevent all losses.

However, the biggest risk may come from not investing at all. If you don’t invest, or only invest in the most conservative vehicles, your money may not grow enough to help you reach your long-term goals, such as a comfortable retirement.

Try to follow an investment strategy that allows for risk but also offers the possibility of reward.

Edward Jones, its employees and financial advisors cannot provide tax or legal advice. You should consult your attorney or qualified tax advisor regarding your situation.This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Edward Jones, Member SIPC