“I began by presenting them with a challenge: “Aunt Minnie has died and left each of you $100,000. You have an investment choice to make. You can invest it all at 7 percent for five years, or you can invest it at 7.5 percent for ten years.” After they had time to reflect, they unanimously chose 7 percent for five years. When I asked them what risk they’d undertaken with this decision, they said, “None.” Their justification was that by staying short, future inflation wouldn’t erode their returns as much as the longer term, and they’d have optionality after the five years. But they were missing the reinvestment risk. They were so focused on what would happen during the investment period, they neglected to look beyond the five years. Not a problem if rates stayed at 7 percent or higher. But if they dropped? Problem. Once the students understood there is risk by omission as well as by commission, my objective was accomplished.”