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Here are some risks to consider: PurcHasing Power risk — Lately, inflation is a huge concern for all of us. But over time, even a low inflation rate can erode the value of your savings. In fact, if the inflation rate averages three percent per year, the purchasing power of a dollar will be cut in half after about twenty-four years. Consequently, if you overload your portfolio with fixed-rate investments,such as CDs and money market accounts whose returns may not keep up with inflation, you may incur purchasing power risk. Liquidity risk — Generally speaking, if you ever need to "cash out" some of your stocks and bonds, you won't have much trouble selling them. But other types of investments are more illiquid. For example, if you buy shares in a limited partnership that invests in real estate, oil, and gas exploration, equipment leasing or other activities, you could eventually make a profit, but you still might have trouble selling your shares at a specific time. Various "alternative" investments, including commodities such as precious metals, agricultural goods and energy products may also prove somewhat illiquid. credit risk — If you want to receive a higher interest rate than that offered by "investment- grade" bonds, you might decide to purchase a bond that receives a lower grade from one of the independent rating agencies. In exchange for the higher interest rate, though, you take on more credit risk — the risk that the bond issuer may default, possibly depriving you of the return of your principal. So-called "junk bonds" typically offer the highest interest rates and carry the highest degree of credit risk. currency risk — When you invest in non-U.S. companies or in bonds issued by foreign governments, you might experience currency risk. This means that changes in the value of the U.S. dollar, relative to foreign currencies, could harm the value of your investments. VUE ON | FINANCE VUENJ.COM 97

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