Our Instincts play a big role in our investment decisions. Often, these instincts are based on our perceptions rather than on information available to us. Today, we have far greater access to information through print, television and internet media, yet our minds are trapped in age old investment myths.
Risk tolerance is the degree of uncertainty that you can handle in regard to a negative change in the value of your portfolio. While investing you may often have to do a risk-return tradeoff, the principle that potential return rises with an increase in risk. With so many different types of investments to choose from, how do you determine how much risk you can handle?