Risk tolerance Close
Risk tolerance is the degree that you are willing to risk losing some of your original investment in exchange for a chance to earn a higher rate of return. The risk-return trade-off requires you to accept more risk in exchange for a potentially higher return. If you have a low risk tolerance, you are considered a conservative investor. If you have a high risk tolerance, you are considered an aggressive investor. In truth, most investors have a moderate risk tolerance, which means their willingness to accept risk lies between that of a conservative and aggressive investor. Younger investors generally have a higher risk tolerance since they have more time to recover from occasional losses. As you get older, your risk tolerance diminishes. By the time you are in late retirement, your risk tolerance is almost always low.