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Investing is a great way to build wealth – but it DOES come with risk, especially if you don’t know what you’re doing.
Not every investment carries the same amount of risk, though! Here’s a breakdown of common investment types, from highest to lowest risk.
High Risk: Cryptocurrency
Cryptocurrency comes with a lot of ups and downs. It’s entirely online, so being scammed or the victim of a cyberattack is high. Cryptocurrency performs without a central bank, meaning there’s nobody in charge – and values can fluctuate frequently, sometimes multiple times a day.
Some Risk: Stocks
Stocks are very popular, but the rate of return isn’t promised. If you throw your savings into a hot, well-performing stock, you could gain a lot – or lose everything if it tanks soon after. A better way to invest in stocks is buying “portfolios,” collections of different stocks meant to minimize investment risk.
Low Risk: I-Bonds
I-bonds are great investments that offer a decent return – at 9.62% in May 2022! – without too much risk. They’re protected from inflation, and provide a MUCH better return than a standard savings account.
High and medium-risk investments, like cryptocurrency and stocks, can bring investors decent returns. But I-bonds are much safer, and offer better returns than a savings account. To build wealth, your investment should match the risk you’re willing to take!