As is the case with most things in life, with investing, you face trade-offs: Investments that have the potential to make more money usually involve more risk, while less volatile investments may not return enough to get you where you want to go.
Here are 3 things to consider when it comes to risk and investments:
- Your willingness to take risk (risk tolerance).
- The amount of risk you can afford to take (your risk capacity).
- The amount of risk you would have to take to achieve your goal within a certain timeline (risk needed).
Check out this short video to learn more.