What is risk tolerance in investing?

What is risk tolerance in investing?

Risk tolerance refers to the degree of variability in investment returns that an individual is willing to withstand. It helps determine the types of investments suitable for you.

How can I assess my risk tolerance?

You can assess your risk tolerance by considering factors like your financial goals, investment timeline, and how you react to market fluctuations.

What are the different levels of risk tolerance?

Risk tolerance is generally categorized into three levels: conservative, moderate, and aggressive, each reflecting different investment strategies.

Can my risk tolerance change over time?

Yes, your risk tolerance can change due to factors like age, financial situation, and changes in market conditions.

What should I do if my risk tolerance doesn't match my current investments?

If your risk tolerance doesn't match your investments, consider rebalancing your portfolio to align it with your comfort level.