Common risks associated with Mutual Funds
Introduction: Mutual funds have long been a popular investment choice for individuals seeking diversification and professional management of their assets. While they offer many benefits, it's essential for investors to understand and navigate the potential risks associated with mutual funds. In this post, we'll explore some of the common risks investors may encounter and strategies to mitigate them. Market Risk: Market risk, also known as systematic risk, refers to the possibility of loss due to fluctuations in the overall market. Since mutual funds invest in various securities, including stocks and bonds, they are susceptible to market volatility. During economic downturns or bear markets, the value of mutual fund holdings may decline, affecting investors' returns. Mitigation Strategy: Diversification is key to mitigating market risk. By investing in a variety of asset classes and sectors, investors can spread out their risk exposure. Additionally, maintaining...