ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -High-risk investments may offer the chance of higher returns than other investments might produce, but they put your money at higher risk. This means that if things go well, high-risk investments can produce high returns. But if things go badly, you could lose all of the money you invested.

Detailed explanation-2: -The highest risk investments are cryptocurrency, individual stocks, private companies, peer-to-peer lending, hedge funds and private equity funds.

Detailed explanation-3: -For example, treasury bills which has zero to minimal risks but would only yield slightly better interest than savings account. However, if the investor willingly risk and put greater amount money for the possibility of better returns then the risk associated with it would also be higher.

Detailed explanation-4: -Risk is an important component in assessment of the prospects of an investment. Most investors while making an investment consider less risk as favorable. The lesser the investment risk, more lucrative is the investment. However, the thumb rule is the higher the risk, the better the return.

Detailed explanation-5: -What Is a Good ROI? According to conventional wisdom, an annual ROI of approximately 7% or greater is considered a good ROI for an investment in stocks. This is also about the average annual return of the S&P 500, accounting for inflation.