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Ask an Expert: What is risk tolerance?

Mach 1 answers the question...What is risk tolerance?
It's time to Ask an Expert! Today's expert is David Lee from Mach 1 Financial, and the question is: What is risk tolerance?

Ability of someone to go through a downturn in the market without significantly changing their portfolio holdings. So there are multiple studies that show that where investors really get burned is by pulling out of the market or getting into the market at just the wrong times. The average investor tends to get in late, when the market is already pretty high and they tend to get out at the wrong time when the market is at or nears it's low. so risk tolerance hasto do with trying to really figure out ,try to put your self in that position where the market goes down ten or twenty percent, how would you react to that ? if you are the type of investor that would say " yo know i don't think i could stomach that.i think i would want to pull out and do something more conservative. " that's you then we're going to put you in a different type of portfolio that's not going to be as exposed to the volatility and asa result of being in a lower risk type portfolio with less volatility you can expect a lower rate of return on that type. risk and return always go hand in hand you can't have high returns without some level of risk. so we try to help you gauge what your risk tolerance is,your ability to withstand or ride thru the ups and downs in the market and depending on where you really, realistically, where you are as an individual we will help tailor your portfolio to something that meets your risk tolerance

Watch the video to see David's answer, and be sure to tune in to the Fox Morning Edge each weekday starting at 7 a.m. for more answers from our experts.

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