Risk Number

As an investor, are you able to clearly define your risk tolerance? If your answer is no, then find out your risk number.

What is risk tolerance? Risk tolerance is a measure of willingness and ability to accept a higher level of risk or volatility in exchange for the potential to gain higher returns.

It is not a factor that is static. Risk tolerance is likely to change with age, income, and other important life events, such as retirement.

Risk tolerance is an important component in investing and financial planning. You should have a realistic understanding of your ability and willingness to stomach large changes in the value of your investments based on your specific risk tolerance; if you take on too much risk, you might panic and sell at the wrong time.