Understand risk tolerance before investing from "summary" of The 7 Most Important Money Decisions You'll Ever Make by Mary Claire Allvine,Christine Larson
Before you begin investing, it is crucial to have a clear understanding of your risk tolerance. This involves knowing how much volatility you can comfortably handle in your investment portfolio. Risk tolerance is not a one-size-fits-all concept; it varies from person to person based on individual circumstances and preferences. To determine your risk tolerance, you need to consider factors such as your investment goals, time horizon, financial situation, and emotional temperament. Your risk tolerance may also change over time as your circumstances evolve. For example, a young investor with a long time horizon may be more willing to take on higher levels of risk in pursuit of higher returns. On the other hand, an older investor nearing retirement may have a lower risk tolerance to protect their nest egg. Understanding your risk tolerance will help you make informed in...
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