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.

Related Terms

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