Just as putting and chipping look deceptively simple to beginning golfers, so can the process of investing for shorter time horizons trip up investors. It looks so easy, but it can be difficult to get right.
Investors may confuse their risk capacity with risk tolerance, for example, venturing out on the risk spectrum and incurring losses just before they need to tap their portfolios. Or they might assume that just because stocks have delivered returns that have bested other asset classes' in the past five years, they'll do it again during the next five.
Christine Benz does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.