A return describes a result over a period
A return can include a change in value and income received from an investment. To interpret it, identify the starting value, time period, and whether costs are included. A past result is an observation, not a promise about the next period.
Risk concerns what could happen
Investment outcomes are uncertain, and money can be lost. Different holdings can be exposed to different sources of uncertainty. A greater possible reward does not mean that accepting greater risk guarantees a greater realized return.
Common misunderstanding: a percentage gain reverses an equal percentage loss
Percentage changes use the value at the time of the change. Once that value changes, the base for the next percentage changes too. Review the sequence rather than adding the percentages as though they shared one base.
Worked example
A gain followed by a loss
A fictional value rises from 100 to 120, a 20% gain. A later 20% fall is 24, because it is calculated on 120. The result is 96, not 100. This example illustrates changing percentage bases; it does not describe an actual investment or predict its risk.