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