Investor Glossary-risk toleranceInvestor Glossary-risk toleranceInvestor Glossary-risk toleranceInvestor Glossary-risk toleranceInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Risk Tolerance

The HTML to link to this page
 

In investing, risk tolerance is the willingness of an investor to tolerate risk in making investments. A high risk tolerance indicates a willingness to invest in more risky investments, and vice versa. In modern portfolio theory, higher returns are assumed to be rewarded by higher potential returns, so individual risk tolerance may limit the kind of return an investor can reasonably expect. Individual risk tolerance is based on psychological factors, such as comfort level, and other personal circumstances, such as years left until retirement (if any) and level of financial security. Financial advisors typically try to estimate their client's risk tolerance before making an asset allocation strategy. The traditional approach is to increase the allocation to stocks as risk tolerance diminishes. In practice, risk tolerance is very difficult to quantify.



Rate this risk tolerance definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: diluted share, phantom income, labor relations, liquidity ratio, APR, per diem, ex-dividend date, ex-dividend, inflation, FICO score, option premium, average price per share, cancelled check, VIX, deferred revenue, covered put, class C shares, quality assurance, irrevocable trust, command economy, in escrow, wholly-owned subsidiary, retained earnings, debt service coverage, balance sheet, real GDP, required rate of return, 1031 exchange, minority interest, dividends payable, EBITDA, deferred tax, risk management, Key Rate Duration, 144a, annual return, implied volatility, limit order, LIBOR, 1035 exchange, margin rate, stock split, open position, 401a, reverse mortgage, current ratio, Zero Cost Collar, FTSE, stock market close


Home | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
Investor Glossary Index >>> # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
©2004-2014 Investor Glossary - All rights reserved - Terms of Use