The essentials2 min read
RiskGerman: Risiko
Financial risk is the possibility that an investment or decision turns out differently than expected, particularly with a loss.
In plain language
Risks include market, default, liquidity and currency risk. Appropriate risk also depends on when you need the money and how much loss you can afford. Price fluctuations alone do not capture every risk.
Let’s make it concrete
An investment may fall 30% in the short term. If you must sell then, a temporary fluctuation becomes a realised loss.
Simplified example for illustration.Worth understanding
Higher expected returns often involve higher risk. That does not mean every high risk is rewarded.
Read more from official sources
For further learning and reference:
Financial education for orientation. No individual investment, tax or legal advice.
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