Relying on someone else's understanding of the investment, such as a close friend or relative, is no substitute for understanding the process yourself. Stop if you catch yourself considering an investment simply because someone you know has invested. If you don't fully understand how an investment works, chances are it might be too complicated for you. If this is the case, you might be better off turning this investment down and considering something else. All investments involve some degree of risk, and the investments promising the greatest return pose the greatest risks.
Some people are able to risk a little more in order to take advantage of a high return.
For example, younger investors might be able to recover from financial loss easier than those who have retired and are living on fixed incomes. Accordingly, younger investors may be willing to hazard more risk in order to get a higher return. But for older persons, less risky investments might be more suitable. Other factors such as education, personal wealth and prospects for future employment may determine your risk factor. An investment is available for every level of risk.