Investing
Putting Them Together
Imagine you have $10 to spend. You have two choices:
Buy a piggy bank: You put your $10 in the piggy bank, and after a year, you have $10. This is very low risk because you know your money is safe, but the return is also low because you don't make any extra money.
Buy a lemonade stand: You spend $10 to set up a lemonade stand. If people buy a lot of lemonade, you might make $20. But if it rains all summer and no one buys lemonade, you could lose your $10. This has higher risk because you could lose your money, but it also has a higher potential return because you could make more money.
So, risk is about how likely you are to lose or gain money, and return is about how much money you could make from an investment.
