Every investment comes with a trade-off between risk and return. High-return opportunities often carry higher risks, while safer investments typically offer lower returns. Understanding this balance is crucial for building a profitable yet sustainable portfolio. Risk refers to the possibility of losing some or all of your investment. It can be systematic (market risk) or unsystematic (company-specific). Return is the gain you earn from your investment, through capital appreciation or income like dividends. Tools like standard deviation, beta, and Sharpe ratio help quantify risk. This section teaches how to assess your personal risk appetite, differentiate between types of risks (credit risk, interest rate risk, etc.), and select investment products accordingly. It also covers diversification—spreading investments across different assets—to reduce risk. By the end of this lesson, learners will understand how to balance their portfolio, evaluate potential gains against possible losses, and make decisions based on time horizon, goals, and comfort with market fluctuations.