Which types of investments are considered high risk?

Investments that are considered high risk generally involve a higher potential for significant volatility and the possibility of loss. Stocks, cryptocurrencies, and startup businesses fit this definition because they can experience dramatic price fluctuations over short periods, influenced by market conditions, regulatory changes, and the performance of the underlying assets or companies.

Stocks inherently carry risks due to market volatility; their prices can rise or fall based on investor sentiment, earnings reports, and broader economic conditions. Cryptocurrencies are particularly notorious for their extreme volatility and lack of regulation, leading to unpredictable price movements. Startup businesses usually have unproven business models and can face numerous challenges that may lead to failure, making investments in them particularly risky.

In contrast, options such as bonds and savings accounts, real estate and mutual funds, and government securities and treasury bills tend to be lower risk. Bonds and savings accounts generally offer more stability and guaranteed returns, while mutual funds provide diversification that can mitigate individual investment risks. Government securities and treasury bills are typically backed by the government's promise to pay, making them some of the safest investment types available.