Is Your Risk Tolerance at War With Your Risk Capacity?
What the difference is--and how you can help mend fences.
Note: This article is part of Morningstar's May 2016 Risk Management Boot Camp special report. An earlier version appeared Nov. 18, 2014.
A 23-year-old starts a new job. She remembers her parents griping and worrying about their stock investments during the financial crisis, and knows she too would feel terrible if she saw her hard-earned investing dollars go down in value. She decides to steer her 401(k) contributions to the stable-value fund, which seems to be the safest option in her company's plan.
Christine Benz does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.