GLOSSARY · INVESTING

Risk tolerance

How much loss in an investment's value someone can accept, combining risk capacity (the financial ability to absorb a fall without changing plans) and risk willingness (the emotional ability to hold on during one). When the two disagree, a portfolio set by the lower of them is more likely to be kept through a bad market.

Also called: risk capacity, risk appetite, risk profile
COMPUTE IT WITH YOUR NUMBERS
Asset allocation by age & risk →What stock/bond/international mix should I hold?
LEARN IT PROPERLY
CHAPTER · INVESTMENT FOUNDATIONS · FOUNDATIONSFinding the Level of Risk You Can Live With
RELATED TERMS
Asset allocationSequence of returns risk
SOURCES
All terms →The Library →