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Investing foundations

Lesson 66 · Written for kid, teen, and little

Finding Your Risk Comfort

Risk tolerance is how much up-and-down you can handle without panicking.

The idea

Risk tolerance is how much bouncing around you can live with before you want to bail out. It is personal — two people can own the exact same investment while one sleeps fine and the other checks the price at midnight. There is also risk capacity, which is different: it is how much a fall would actually hurt, given when you need the money. A good plan respects both, and the honest test is what you do during a real drop, not what you predict you would do. 🧭

A

Words to know

5

Risk

The chance that things turn out differently than you hoped. Your $100 could become $130 — or $70.

Risk tolerance

How much up-and-down you can handle without wanting to quit. Some people sleep fine through a 30% fall; others do not.

Risk capacity

How big a fall your situation could actually cope with. Money you need next month has almost no capacity for risk.

Time horizon

How long it is until you need the money. Forty years is a long horizon; six months is a short one.

Panic selling

Selling in a hurry because a drop feels scary. It turns a paper loss into a real one.

Try it — no accountSort into groups

How much risk makes sense depends a lot on when you need the money.

Sort each situation: can it handle more risk, or is it better kept safer?

0 / 6 sorted

In the full lesson

  1. 1Sort into groups
  2. 2Work out the number
  3. 3Make the call

Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.

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