The Raw Fundamentals
When you start exploring the types of investments you can make, you typically see the categories for them laid out in a chart and arranged by potential risk and return. As we’ve discussed, risk represents how strong the possibility is of losing money in the investment. Return, on the other hand, represents the potential profit or loss you could receive on the investment. Those with the lowest risk but lowest potential returns are at the bottom, while moving up the chart to the top you approach those with the highest potential returns but also the highest risk. The three broadest general categories of investments that we will be exploring are cash, bonds, and stock, and are arranged in risk/return order (with ...
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