What is 'Risk Tolerance'?

Risk tolerance is the degree of variability in investment returns that an individual is willing to stand. It is an important component in investing. ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Term of the Day | Words to Know Risk Tolerance Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand. Risk tolerance is an important component in investing. You should have a realistic understanding of your ability and willingness to stomach large swings in the value of your investments; if you take on too much risk, you might panic and sell at the wrong time. Read More » Related to "Risk Tolerance" Determining Risk and the Risk Pyramid Many investors do not understand how to determine the risk level their individual portfolios should bear. Read More » Risk Tolerance and Your Personal Portfolio To best manage your investment portfolio over the years, you need to determine your risk tolerance. How much risk you are willing to take? Read More » Four Steps to Building a Profitable Portfolio This is a step-by-step approach to determining, achieving and maintaining optimal asset allocation. Read More » SPONSORED BY FIDELITY INVESTMENTS 3 Ways That Fidelity Investments Stands Out As An Employer We all need something to motivate us to show up to work each day. Fidelity understands this and provides its employees with the tools necessary for success. Learn More » Related Definitions Variability Variability is the extent to which data points in a statistical distribution or data set diverge from the average, or mean, value as well as the extent to which these data points differ from each other. Read More » Swing A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account. Read More » Asset Class An asset class is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Read More » Time Horizon Time horizon is the length of time over which an investment is made or held before it is liquidated. Read More » CONNECT WITH INVESTOPEDIA Email sent to: mondemand.forex@blogger.com To update your newsletter preferences or unsubscribe, click here. 114 West 41st St, floor 8 New York NY 10036 © 2019, Investopedia, LLC, All Rights Reserved | Privacy Policy