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Risk
The possibility that an investment will perform worse than expected, including losing money.
All investments carry risk. Higher potential returns generally come with higher risk. Diversification (spreading money across different investments) reduces risk without necessarily reducing expected returns.
Example
Fatima puts £5,000 in a single company's shares. If that company goes bankrupt, she loses everything. If she had spread her £5,000 across 500 companies in an ETF, one bankruptcy would barely affect her.
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