Another thing you need to analyze before you invest is around Liquidity. Liquidity analyses how long will it take for you to convert your investment to cash without major loss of value. Again like with Risk, the most liquid of investments usually do not have a very high return. But the relationship between liquidity and return is not as clear as with risk. For example, real estate is a very illiquid asset, but this year, it has had very bad returns. Similarly, Gold is an relatively illiquid asset, but has had decent return this year.
But it is important for you to understand liquidity as putting all your free cash into a very illiquid asset can actually erase all your investment, when there is some kind of emergency.
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