Every investment has risk. Understanding this protects you from bad decisions.
Risk and return go together
The higher the possible return, the higher the risk usually is. No one can promise high returns without risk.
Diversify
Don't put everything in one place. Spread across different types: emergency fund, fixed income, dollar, crypto. If one does poorly, the others hold.
Questions before investing
- Do I understand how this investment works?
- How long can I leave this money applied?
- If I lose part of this amount, does my life change?
Practical rule
Invest only what you can leave applied for the contract term, without depending on it for monthly bills.
Summary
- Higher return comes with higher risk. There is no return without risk.
- Diversify and invest only what you won't need in the short term.