Podcasts Business Investing Money Guy Show Mastering the World of Investing

Mastering the World of Investing

Published: Sept. 24, 2007, 2:25 p.m.

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Basic Definitions

Diversification: The idea of spreading out your money across many different types of investments.\\xa0 Choosing to diversify your investment holdings reduces your risk tremendously.

Risk Tolerance: An investor\\u2019s ability to withstand losses caused by one or more of the different types of risk. This ability can be limited by your temperament as well as your time frame and financial circumstances.\\xa0 For example, someone who is investing for a goal 10 to 20 years or more in the future generally has a higher risk tolerance and may feel more comfortable with riskier investments than a person whose investment goal is only 5 years away or less.

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For more information, visit the show notes at http://www.moneyguy.com/2007/09/mastering-the-world-of-investing

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