The term investing is often understood to mean purchasing of stocks and bonds or mutual and exchange traded funds in retirement plans (e.g., IRA, 403(b), and 401(k)). While this is the context we will focus on, it's useful to keep in mind that investing is much broader. It includes direct investments in unlisted corporations, acting as an angel investor in very early stage companies, participating in private equity or hedge fund ventures, etc. In fact, it applies to any situation in which you are spending money with a view to receiving some positive return in future.
When we invest, we face risk. Financial intermediaries (e.g., brokers, advisors, insurance agents) sometimes “conveniently” neglect to mention investment risks, hoping instead to tempt us with stories of high returns or rewards. Accordingly, we must always make investing decisions while simultaneously considering risk and return.