Each individual has a risk tolerance that should not be ignored. Any good broker or financial planner knows this, and they must take the trouble to help you determine what your risk tolerance. Then they work with you to the investment not exceed your risk tolerance to be found.
Determining one's risk tolerance includes several things. First you need to know how much money you have to invest, and what your investment and financial goals.
For example, if you plan to retire in ten years, and you have not saved cents to that end, you have a high risk tolerance - risky - - a number of aggressive because you have to invest to reach your financial goal.
On the other side of the coin, if you're in your early twenties and you want to start investing for your retirement, your risk low. You can afford to watch your money grow slowly over time.
Realize that your natural need for a high risk tolerance and your need for a low risk tolerance really does not affect how you feel about risks. Again, there is much in determining your tolerance.
For example, if you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping slightly, what would you do?
Would you sell out or do you let your money ride? If you have a low tolerance for risk, you would like to sell out ... if you have a high tolerance, would you let your money ride and see what happens. This is not based on what your financial goals. This tolerance is based on how you feel about your money!
Again, a good financial planner or broker to help you determine the level of risk you are comfortable with, and help you choose your investments accordingly.
Your risk tolerance should be based on what your financial goals and how you have the possibility of losing your money to feel. It's all tied together.
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