How Much Investment Risk Can You Stomach?
on Wednesday, September 28, 2016
What We're Reading
Basically, risk tolerance is the measure of how much risk someone can handle as an investor.
Financial advisors say that risk tolerance is the amount of risk that an investor is comfortable taking, or the degree of uncertainty that an investor is able to handle, explains Manisha Thakor, director of Wealth Strategies for Women at Buckingham and The BAM Alliance.
Risk tolerance often varies with age, income and financial goals. It can be ascertained by many methods, including questionnaires designed to reveal the level at which an individual can invest but still be able to sleep at night, Thakor said.
When it comes to risk tolerance, investors need to ask themselves some tough questions, according to Thakor. For instance: How much money do you have available? And how much of it can you afford to lose?