Risky business: risk tolerance vs. risk capacity

Is it more important to eat well or sleep well? I’ve heard this question used to describe the trade-off between earning higher returns or having less risk in your investment portfolio. While there are many factors that go into selecting the right investment mix, the two I most often see confused are risk tolerance versus risk capacity. While the word “risk” is in both, these two factors address different aspects of your investment portfolio.Continue reading