Risk Tolerance

Risk Tolerance is the degree of uncertainty that an investor can handle in regard to a negative change in the value of his or her portfolio.

Risk Tolerance

Risk Tolerance is the degree of uncertainty that an investor can handle in regard to a negative change in the value of his or her portfolio.

 


Explanation of Risk Tolerance

There are several factors affecting risk tolerance including the time horizon that one has to invest, future earning capacity, and the presence of other assets such as a home, pension, social security or inheritance.  In general, one can take greater risk with investable assets when there are other, more stable sources of funds available. 


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