Question

Explain the idea of risk tolerance.

Answer 1

Older people usually get Risk tolerance as they age, but younger people are encouraged and get the urge to do something. This usually has to do with equity funds, and this doesn’t come with age it mostly comes with higher net worths and to take greater risks with investments for example.

Answer 2

Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand in their financial planning. Risk tolerance is an important component in investing.