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Each individual has a tolerance for risk should not be ignored. Any good stockbroker or financial planner knows, and they should make an effort to help you decide what is your risk tolerance. Second, they must work with you to find investments that do not exceed your risk tolerance.

Determine the degree of risk tolerance involves several different things. First, you need to know how much money you have to invest, and that your investment and financial objectives are. For example, if you plan to retire in ten years, and you have not a single penny saved for this purpose, you need to have a high risk tolerance - because you will need to do some aggressive - risky — investment in order to achieve your financial goal.

On the other side of the coin, if you are in your early twenties and want to start investing for your retirement, your tolerance for risk is low. You can let you watch your money grow slowly over time. Realize, of course, that you need a high level of risk tolerance and your need for a low risk tolerance really has no bearing on how you feel about risk. Again, there is much to determine your tolerance. For example, if you invested in the stock market and you look at the daily movement of the stock and saw that it was slightly down, what would you do?

Do you want to sell or if you leave your money ride? If you have a low risk tolerance, you do not want to sell… if you have a good tolerance, you should leave your money ride and see what happens. It is not based on what are your financial goals. This tolerance is based on what you feel about your money!

Again, a good financial planner or stockbroker should be useful in determining the level of risk that you are comfortable with, and help you choose your investments accordingly. Your tolerance for risk should be based on what your financial goals are and how you feel about the possibility of losing your money. It’s all linked.