Which type of investment carries the highest risk?

Speculative investments carry the highest risk due to their nature and the volatility associated with them. These types of investments often involve assets that are not well-established and can yield high potential returns, but also come with significant uncertainty and the possibility of substantial losses. Speculative investments can include things like penny stocks, cryptocurrencies, and options trading, which can fluctuate wildly in price due to market conditions, investor sentiment, and other unpredictable factors.

In contrast, bonds are typically seen as safer investments, providing fixed interest returns with lower risk. Index funds and mutual funds, while they come with some degree of risk, generally invest in a diversified portfolio of assets, which helps to spread risk and reduce the potential for significant losses. Therefore, when evaluating the risk associated with different types of investments, speculative investments stand out due to their high volatility and potential for dramatic price changes, making them the highest risk option.