Risk vs. Reward refers to the balance between the potential gain (reward) and the likelihood of loss (risk) in an investment. Generally, higher-risk investments offer the potential for higher returns, but they also come with a greater chance of losing money. Conversely, lower-risk investments tend to offer more stability but with smaller returns.
Risk tolerance is an individual’s ability to withstand potential losses. It’s shaped by factors such as financial goals, time horizon, and personal comfort with market fluctuations. Understanding your risk tolerance is crucial because it helps you choose the right investments for your situation, avoi...