All investments involve some risk. Before investing, you should understand and be comfortable with the risks of each investment you plan to make.
As a rule of thumb, the more risk you take on, the higher the potential return. But there’s also a greater chance that you’ll lose some or all of the money originally invested. When thinking about how much risk you’re willing to take, keep some things in mind:
- your current financial situation
- how much you know about investing and how comfortable you are with it
- whether your financial goals call for taking on more risk