Definition of High Risk Investment
What is a high risk investment? What is the definition of the term "high risk investment"?
A "high risk investment" is an investment that carries a high degree of risk - meaning, there is a strong chance that you could lose a substantial amount (or all) of your investment.
The potential benefit of a "high risk investment" is that there is a chance that you could make a very high return on the investment as well.
Examples of high risk investments? Penny stocks. Speculative option plays.
In the case of a penny stock, you could easily lose most or all of your investment. On the other hand, there is also a chance that you could realize a phenomenal return, which is why many people are lured into the world of penny stocks.
On the flip side of things you have low risk investments. A low risk investment means just that - there is very low risk, so your investment is considered to be relatively safe. On the other hand, the downside of low risk investments is that you will also likely receive a very small return.
Examples of low risk investments? US Treasury securities. Dividend mutual funds.
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