**It hurts more to lose then to gain the same amount money.**In finance, risk is synonymous with volatility, the standard deviation of the returns.

Problem: **You can't just all add the individual period's returns up to get the your returns at the end. **

For example: you start with $10,000. In the first month, you lose 20%, next month, you gain 20%. Congrats, **you've lost 4% of your original investment.**

Or, another example: if you lose 50% of your money, you'll need to gain 100% to get back to even.

This is well explained in more detail when you read about arithmetic vs geometric mean returns, or the volatility drag.

This is why it's important to measure the risk-adjusted returns. When you're choosing between two investment options, this is the most important metric to look at.