Losses of 30%-50% are not unusual. (We just went through a decline like that in 2008.) Is that too big of a risk?Fortunately losses of that size are not usual. Otherwise no one would be investing in the stock market. 2008 was a near collapse of US and world financial markets. The last one began in 1929. In such events neither stocks nor bonds are safe, although investors who kept their cool and didn't sell at the bottom have recovered much of their losses. But the advice to diverisfy and to keep some reserves in liquid assets like CDs and bank accounts is good. 20% corrections are common and you should be prepared to ride them out without having to sell at the lows.
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