Risk tolerance is how much of a loss you are prepared to handle within your portfolio. Your goals, investing timeline and comfort level all factor into the equation. Risk tolerance is the ability to withstand losses when your investments perform poorly. Anytime you invest money into something, there is a risk, whether large or small, that you might not get your money back—that the investment may fail. For bearing that risk, you expect a return that compensates you for potential losses. Chapter 5 “Investing as a Couple” in Financial Essentials for Couples goes into this in much greater detail so that you and your partner can find a mutually satisfying investment strategy.
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