PBA Tip of the Day brought to you by Doug DeMuth with Edward Jones (623) 551-0523.3 Types of Risk: Your risk level covers three main areasRisk Tolerance: Risk tolerance describes your emotional comfort with risk. Gauging your comfort with risk is important because it’s unlikely you’ll reach your long-term goals if you abandon your strategy during the inevitable short-term market decline. Typically, you’ll be asked to complete a questionnaire that can gauge how you might react to risk in different situations.Risk Capacity: This is basically your ability to handle risk. Your investment time horizon is often one of the biggest determining factors here. For example, if you’re younger, you have a longer time to make up for potential declines and could reasonably handle more volatility. If you’re retired, however, you likely have less ability to handle stock market declines.Required Risk: This describes how much risk you may need to take to reach your goals. In general, the higher the return needed to reach your goals, the more potential risk you’ll need to take to achieve them. Contact Doug today for a risk analysis to cover what is best for you and your family!