This means that we are really talking about volatility rather than risk. Volatility tells us about short-term price fluctuations. It tells us nothing about what a volatile investment may be worth down the road. Benjamin Graham, the famous author of The Intelligent Investor , observed this confusion regarding risk 50 years ago. An investor worries about risks to business value, since that should be the basis for the investment.
Time can help heal all of the aforementioned risks.
Not understanding risk may prevent you from reaching your goals. If you think an investment is risky, when, in reality, it is merely volatile, you may decide to avoid that investment and thereby miss out on the long-term return you need to reach your goals. The opposite is also true. If you think an investment is safe just because it isn't volatile, you are in for a shock. If you're investing for the long term, the acceptance of volatility may not be as risky as you think.