Different investors prefer different levels of risk. How can you know your own risk tolerance?
To some extent, your personal preferences can determine your capacity for investment risk. If you take chances in other areas of your life, you might be more willing to take on greater risk when you invest, in exchange for potentially greater rewards.
However, your risk tolerance can change over time. When you’re just starting out in your career, you may feel you can invest more aggressively, since you have years to overcome short-term downturns. But as you near retirement, you may want to reduce your risk exposure.
Also, you may have different levels of risk tolerance for different goals. For example, if you need a certain amount for a new car or a long vacation in a year or so, you may want to put away money in a low-risk vehicle, so you can be confident the funds will be there when you need them.
Risk is part of investing – but the greatest risk of all is not investing for your goals.
This content was provided by Edward Jones for use by Daniel Pellerin, your Edward Jones financial advisor at 189 East Main Street Suite G, in Newport, (802) 334-6261.