What are the different risks involved with investing in mutual funds?
• Market Risk: There are times when prices or yields of all securities in a particular market rise or fall due to certain outside influencing factors. This could affect highly profitable companys and a fledging corporation. • Inflation Risk: Inflation is nothing but the loss of purchasing power. When inflation grows faster than earnings on an investment, one may be able to buy less. One is exposed to inflation risks when prices rise faster than ones income. • Credit Risk: The ability of a company to repay investors money or to make interest payments determines the credit risk that investors face. • Interest Rate Risk: Interest rates are not predictable and can adversely affect the prices of stocks and bonds. When interest rates rise, bond prices fall and vice-versa. A diversified portfolio can help in offsetting these changes. • Exchange Risk: Many companies generate revenues in foreign currencies and may have investments or expenses also denominated in foreign currencies. Hence, chang
