What is risk tolerance?
What is risk tolerance?
Risk tolerance is a topic that is often discussed, but rarely defined.. Risk tolerance is an important component in investing. An individual should have a realistic understanding of his or her ability and willingness to stomach large swings in the value of his or her investments. Investors who take on too much risk may panic and sell at the wrong time. Knowing your risk tolerance goes far beyond being able to sleep at night or stressing over your trades.
