Risk
Investment risk is the possibility that your investment could be worth less than you paid or fail to achieve the returns you need.
1 min read Learning to Invest
What it means
Investment risk is the possibility that your investment could be worth less than you paid or fail to achieve the returns you need. Higher potential returns usually come with greater uncertainty.
Example
Shares can produce higher long-term returns than cash, but their value can fall significantly along the way.
Why it matters
Understanding risk helps you choose investments that suit your goals and time horizon.
Avoiding all risk can make it harder for your money to keep up with inflation.
Is risk always bad?
No. Taking some risk is usually necessary to achieve higher long-term returns.