Risk tolerance
How much loss an investor can bear emotionally without abandoning their plan.
Tolerance depends on temperament and experience, and it changes with markets: people tend to overestimate it in rising markets and underestimate it after falls. Plan for how you are likely to feel in a crash.
Learn more in these lessons
- Risk tolerance and risk capacityHow much investment risk should you take?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.