27 Stock Market Investing Risks You Need to Know
Smart investors know how to minimize risk
Published in
7 min readJan 29, 2021
Everything in life comes with risk, and stocks are no different.
If you want to put your money in something risk-free, U.S. treasury bills are considered the lowest-risk investment in the world.
There’s just one problem: they’re a terrible long-term investment.
This chart from Morningstar shows how horribly treasury bills have performed compared to stocks since 1926.
One dollar invested in small stocks grew to $36,929 by 2017. That same dollar invested in treasury bills grew to just $21. Ouch.
The good news is a lot of the downside in the stock market can be reduced simply by understanding and analyzing your risks.
Below, we’ll explore four main types of risk for stock market investors:
- Company-Level Stock Investing Risks
- Industry-Level Stock Investing Risks
- Market-Level Stock Investing Risks
- Investor-Level Stock Investing Risks
