Lesson 11 of 43: What Are the Risks of Investing in Stocks?

  • We cover a range of investing risks, including company, industry, market, and investor-level risks. 
  • Truly understanding each risk allows you to develop a strategy to protect against it. 
  • We don’t intend to scare you away from investing. Remember, since 1926, the S&P 500 has never had a 15-year period where it failed to deliver a profit.

Everything in life comes with risk, and stocks are no different.

If you want something that’s truly risk-free, U.S. treasury bills are often considered to be the lowest risk investment in the world.

The only problem is they are a terrible long-term investment. This chart from Morningstar shows how horribly treasury bills have performed compared to stocks since 1926.

The good news is a lot of the risk in the market can be reduced by following well-researched practices and avoiding common mistakes.

Today, we’ll outline some common risks and in future lessons we’ll discuss how to reduce your exposure to them in your own investing.

To be clear, this isn’t an exhaustive list of all the possible stock market risks.

And the purpose of this lesson isn’t to scare you away from investing.

We want to help you understand the common risks so you can develop an investing strategy that balances risk against reward in a way that’s right for you.

Let’s start with…

This is just a preview from our free course: How to Invest in Stocks: Learn How to Buy Stocks, Make Money, and Avoid Mistakes
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