Page 14 - A Canuck's Guide to Financial Literacy 2020

14

When it comes to investing, there are risks involved and it's important for you to understand
the various types of risks and what they entail. The reason why we want to explore the
different types of risk is because we want to avoid the ultimate risk - losing all of your
capital. You must weight the potential reward against risk to decide if it's worth putting your
money on the line.

Risk & Reward

Understanding the relationship between risk and reward is a crucial piece in building your
investment philosophy.

Investments such as stocks, bonds and mutual funds have their own risk profile and risk
characteristics and understanding the differences can help you diversify and protect your
investment portfolio. The higher the risk, the higher the return.