Risk tolerance

Risk tolerance is the measure of how much risk you as an investor are willing and able to bear. It is a good idea to examine and define your risk tolerance so you can select appropriate investments. If you acquire investments that have a higher risk than is indicated by your tolerance you will likely get upset and jump ship when the value declines more than you are happy with. On the other hand if you acquire investments that have a lower risk than your risk tolerance you will likely be frustrated and uninspired when your expectations for appreciation in value and you are just as likely to jump ship.

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