Lesson 7 of 21 · 2 min read
Risk, in plain words
Why prices fall, what it means to lose it all, and what spreading money out does and doesn't do.
Prices go down too
Risk is the chance of ending up with less than you put in. How much a price jumps around is called volatility. Large company shares often move a percent or two in a day; coins often move five or ten, in either direction.
Some things go to zero
A company can go bankrupt and leave its shares worth nothing. A token can lose all its buyers. When that happens the money doesn't come back.
Spreading it out
Holding several different things instead of one is called diversification. If one of them falls, it takes only part of the total with it. It lowers the damage one bad outcome can do; it doesn't remove risk, and in a bad stretch many things fall together.
Borrowed money
Trading with borrowed money is called leverage. It multiplies gains and losses alike, and it can lose more than was put in. Viru offers none.
Money you may need
Because any investment can fall right when the money is needed, people generally keep rent, tuition and food money out of investments altogether.
Education only. Nothing here is a recommendation to buy or sell anything.