Risk Tolerance
An investor’s comfort level with market fluctuations and losses.
Detailed Description
Risk Tolerance
What is risk tolerance?
Risk tolerance is the degree of variability in investment returns that an individual is willing to withstand.
Why is understanding risk tolerance important?
It helps investors align their choices with financial goals and manage emotional responses to market volatility.
What factors influence risk tolerance?
Factors include time horizon, financial situation, investment goals, and personality/experience.
What are the types of risk tolerance?
Risk tolerance types include aggressive, moderate, and conservative.
How can one assess their risk tolerance?
Assessing risk tolerance involves self-reflection and structured evaluations, often through questionnaires provided by financial advisors.