Types of risk
Understand why four key risks: (1) Market risk — systematic price movements affect all investments (NGX bear market affects most stocks), (2) Inflation risk — Nigeria's high inflation can erode real returns on low-yielding assets, (3) Currency risk — naira volatility affects foreign-currency assets, (4) Credit risk — bond issuer default (e.
In this lesson
Types of risk is part of Investing Foundations. This preview shows how investment-universe connects to everyday family decisions such as earning, saving, spending choices, goals, approvals, or parent-guided money conversations inside Progress Penguin.
Today’s money mission
Imagine this situation: You invest in a US dollar-denominated fund from Nigeria. The naira depreciates 40% against the dollar.
What you need to know
Four key risks: (1) Market risk — systematic price movements affect all investments (NGX bear market affects most stocks), (2) Inflation risk — Nigeria's high inflation can erode real returns on low-yielding assets, (3) Currency risk — naira volatility affects foreign-currency assets, (4) Credit risk — bond issuer default (e.g. corporate bond issuer goes bankrupt).
Real-life example
Real-life money moment: You invest in a US dollar-denominated fund from Nigeria. The naira depreciates 40% against the dollar. What type of risk does this represent and does it help or hurt you? The key lesson is: Currency risk cuts both ways.
Progress Penguin connection
Open the investment simulator and apply each risk type as a percentage reduction to a 15% nominal return: 5% inflation risk, 3% currency risk, 2% liquidity risk. Watch the real return column after each reduction. Risk is not one thing — it is a stack of separate pressures.
Activity preview
Try the money challenge
Run the investment model and test: four key risks: (1) Market risk — systematic price movements affect all investments (NGX. Adjust one variable — time, rate, or amount — and note which has the biggest effect on the final balance.
Try one real money action
Open Tasks and submit proof for one task, or open Requests and make a deposit request. Parent approval can happen later.
Quiz preview
'Currency risk' affects:
You invest in a US dollar-denominated fund from Nigeria. The naira depreciates 40% against the dollar. What type of risk does this represent and does it help or hurt you?