In investing, return and risk go together: broadly, the higher the expected return, the higher the risk taken.

What is risk?

Risk is the chance that the realized return differs from the expected one. High volatility means the potential for both large gains and large losses.

Diversification

Not putting all your eggs in one basket — spreading across asset classes — is the best-known way to lower total risk. Funds provide diversification by design.

Past returns

Past performance is not a guarantee of the future. When choosing a fund, look not only at its return but also at its risk level and cost.