Stocks offer growth potential but come with higher risk from "summary" of All About Asset Allocation, Second Edition by Richard Ferri
Investors who choose to invest in stocks are often attracted by the potential for significant growth in their investments. Stocks have historically outperformed other asset classes over the long term, making them an appealing choice for those seeking to build wealth. However, with this growth potential comes a higher level of risk compared to other investment options.
The value of a stock can fluctuate significantly in response to various factors such as economic conditions, market volatility, and company performance. This volatility means that investors in stocks are exposed to a higher degree of risk than those who invest in more conservative assets like bonds or cash equivalents. While stocks have the potential to deliver high returns, they also have the potential to incur significant losses.
Investors must be prepared to weather the ups and downs of the stock market if they choose to include stocks in their investment portfolio. Market downturns can result in a decline in the value of stocks, potentially leading to losses for ...
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