Risk and return
In one sentenceA principle linking the expected return on an investment with the degree of uncertainty about it: whoever seeks a higher return must accept a greater chance of fluctuating results or loss.
Simply put
A relatively safe investment gives a modest return, and an investment that could double your money could lose a large part of it. There is no high return without risk, and any offer that promises it deserves caution.
Your choice depends on your goal, your time frame, and your ability to bear a loss: cash you need in six months does not go into a volatile investment.
Worked example
A business owner compares two options for 100,000 SAR for one year with hypothetical figures for illustration: (A) a near-certain return of 4%, and (B) an expected return of 10% that may range from a 10% loss to a 30% gain.
Option (A)100,000 × 4% = about 4,000 SAR
Option (B): worst case100,000 × (−10%) = loss of 10,000 SAR
Option (B): best case100,000 × 30% = 30,000 SAR
The price of the extra return in (B)A range of outcomes from −10,000 to 30,000 SAR