Do all investments carry the same level of risk?

01:35 Mins Read

Not all investments carry the same level of risk. Find out more by watching this video.

Transcript

All investment options carry some risk or the other. And not all of them have the same degree of risk.
In fact, investments are classified according to their risk levels as high-risk, medium-risk, and low-risk. Equities, commodities, and derivatives are all common high-risk investment options. So, the possibility of the actual returns being different from the expected returns on these investments are high. Index mutual funds, real estate, and high-income bonds are some medium-risk investment options. With these investments, the actual returns may generally not be very different from the expected returns. And finally, money market instruments, bank deposits, and government bonds are considered as low-risk investments. The actual returns on low-risk investments are almost always the same as or very similar to the expected returns. So, as you can see, not all investments carry the same level of risk. Therefore, when investing, it is essential to choose the right investment option according to your risk appetite. Did you also know that it is possible to compare the risk of an asset with the overall market? That is where unlevered beta can help you. Head over to the next chapter of the module to learn all about unlevering beta.

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