• Risk tolerance is a measure of the degree of loss that an investor is willing to tolerate within their portfolio.
  • Stock volatility, market fluctuations, economic or political events, and regulatory or interest rate changes affect an investor’s risk tolerance.
  • Age, investment goals and income affect the investor’s risk tolerance.
  • An aggressive investor usually has a higher risk tolerance and is willing to risk more money for the opportunity to make better but unknown returns.
  • A conservative investor usually has a lower risk tolerance and is looking for investments with guaranteed returns.