What does this mean? Thank you for explaining this stuff to me. This is just a confusing topic for me.

Without the "risk" factor of investments, there will be less financial gain. ( Would this be considered a negative effect that global peace would have on economics)

Yes. If you follow the stock market, many people are "risk takers" but that means either they will make a lot of money, or lose the investment! If it's a "sure thing" it isn't necessary to "discount" fees or increase the interest. Investing in "Penney Stocks" means you won't lose much money but neither will you gain big profits.

Sra

Safe investments -- like bank accounts -- are sure to keep your investment. These are almost always risk-free investments.

However, the more risk you're willing to take the larger amount you MIGHT make if the investment is successful.

Let's consider how you might "invest" $5,000.

The least risky is to put it under your mattress. You won't lose it, but you won't make any money on it.

You could buy a government bond, which has almost no risk, but you won't make much money in interest.

You could invest in stock in a company. This is risky. You might double or triple your money in 2 years if the price of the stock goes up. You might lose over half of your money if the price of the stock goes down.

The statement "Without the 'risk' factor of investments, there will be less financial gain" implies that investments inherently involve a level of risk, and that taking on this risk is necessary in order to achieve financial gains. In other words, to potentially earn higher returns on investments, one must be willing to accept the possibility of losing money in the process. This is a fundamental principle in the field of finance.

Considering your second question, whether this statement can be interpreted as a negative effect of global peace on economics, it depends on the context. Global peace generally refers to a state of tranquility and absence of war or conflict between nations. In such a scenario, it is possible that political stability and reduced economic uncertainties could lead to lower levels of risk and volatility in markets. As a consequence, the potential financial gains from investments may also decrease.

From an economic standpoint, this can be seen as a positive effect because reduced risk can attract more investors who prefer stability. On the other hand, some investors thrive on risk and may perceive this as a negative effect because their opportunities for high financial gains may diminish.

However, it's important to note that the relationship between global peace and its impact on investments and financial gains is complex and can vary in different situations. Other factors, such as economic policies, government stability, and market dynamics, also play significant roles in determining financial outcomes.

In summary, the given statement highlights the importance of risk in investment and how it affects financial gains. Whether the potential reduction in risk due to global peace is viewed as a negative or positive effect on economics depends on individual perspectives and specific circumstances.