Any stock broker or financial planning experts knows that every human beings have a risk tolerance. These experts encompass a good role to find out good investment plans that not exceed your risk tolerance .

How can we find out the risk tolerance capacity of an individual ?. It depend upon the financial capacity to invest money and certainly , your financial goals .

For example Mr. Scott planning to retire in 5 years but he has not saved much money for his after retirement life . In the other hand Mr. Matthew is very young and he cover a plan to start invest for his retirement.

Considering the cases of Mr. Scoot and Mr. Matthew, we can say that Mr. Scott need to have a high risk tolerance, because he need to do some innovative and challenging action of investment to reach his financial goals. But in the case of Mr. Matthew , his risk tolerance is very low; he can enjoy watching his money grow slowly over time.

In the above story we can understand that , Mr. Scott need for a high risk tolerance and Mr. Matthew need for a low risk tolerance . But keep in mind , what every they need a high risk tolerance or a low risk tolerance actually has no manner on how they feel about risk , it certainly a lot in determining their tolerance.

For example, if you invested in the stock market and you are watching the movement of your stock daily and painfully know that it was dropping indecisively , what would you do?

If you have a low tolerance for risk, you would want to sell out… if you have a high tolerance, you would let your money traverse and see what happens. These decisions has no relation with your financial goals this is strictly based on how you feel about your money.

So , a good financial planner or stock broker should help you determine the level of risk that you are relaxed with, and help you choose your investments consequently.

Your risk tolerance should be based on what your financial goals are and how you feel about the prospect of losing your money. Actually these are the two sides of the same coin.

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