Risk Tolerance

Figure out how much risk is right for you by separating your ability, willingness and need to take risk, then match your investments to the answer.

The right amount of risk is personal

There is no single correct level of risk. A 25-year-old with a steady job and decades ahead can often afford big swings. A retiree who needs income next year may not. Two people with identical finances can also feel very differently about watching their account fall 30%. Risk tolerance is about finding the level that fits your situation and your temperament, so you can stick with your plan when markets get rough.

Unlock all of Investing School

The rest of this lesson, its chart examples and quiz are part of Investing School. Start free with Stock Market Fundamentals and the first lesson in every category.