Risk Tolerance

What Does Risk Tolerance Mean?
The degree of uncertainty that an investor can handle in regard to a negative change in the value of his or her portfolio.

Investopedia explains Risk Tolerance
An investor's risk tolerance varies according to age, income requirements, financial goals, etc. For example, a 70-year-old retired widow will generally have a lower risk tolerance than a single 30-year-old executive, who generally has a longer time frame to make up for any losses she may incur on her portfolio.

Filed Under: Personal Finance

Related Terms

Asset Allocation
Bernoulli's Hypothesis
Diversification
Investment Objective
Investment Style
Portfolio
Rebalancing
Risk Averse
Risk Discount
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