It plays a significant role in determining the type of investment strategy that someone chooses and how much they opt to invest.
Risk tolerance is the amount of risk that an investor is willing to endure. It plays a significant role in determining the type of investment strategy that someone chooses and how much they opt to invest. Investors with longer time horizons might be more willing to take on a riskier investment, while investors focused on a short-term financial goal might be more risk-averse.