How to think about risk in financial planning
December 21, 2012

(MoneyWatch) Bloomberg's Pimm Fox recently asked me how investors should think about risk. He wasn't referring to your portfolio going up and down. Instead, he meant how you address the outside factors that could derail your plan, even if your returns are better than you were anticipating. Here's how you should think about those outside factors.


Investment gains and losses. Before we get into the other types of risk, let's have a quick review of the risk of gains and losses. When talking about your portfolio, there are two types of risk:

Good risk, for which you're compensated through higher

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