What are returns?
Returns are the change in the value of your investment over time plus the value of any income received from it (e.g. dividends from shares). Returns can be positive or negative.
What is inflation?
Inflation is the rate at which the prices of goods and services increase over time. The effect of this is to reduce the buying power of your money. For example, if you put R 1,000 under your mattress today, it would only have the spending power of around R 558 in 10 years’ time (at 6% inflation each year).
What is risk?
Risk is the chance that an investment will not be as good as you expected or were promised. It means that you might not get some or all of your money back and you might not get any income (e.g. interest). Risk is also about volatility – the possibility that your investment will go up and down. For example, if you invest for short periods of time in a volatile investment like shares there is a high risk that the investment will be in a down phase when you want to get your money out.