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What is your Risk Tolerance?



Risk Tolerance is a gauge of a client’s willingness and ability to withstand both fluctuations in the value of their investments and volatility in their investment returns. Risk varies from one mutual fund to another. A client may be willing to assume some risk proportionate to their desire to obtain higher returns. Generally, a client’s risk tolerance will fall into one of the following categories:

Risk Category

Description

Low

If you are a client with a low risk tolerance, then you are risk adverse; willing to accept only a minimal amount of volatility in your account and willing to accept lower investment returns in order to preserve your investment capital.

Low to Medium

If you are a client with a low to medium risk tolerance, then you are willing to accept slightly more volatility, as compared to a client with a low risk tolerance, in return for the prospect of some increased growth.

Medium

If you are a client with a medium risk tolerance, then you are willing to accept some volatility in your account which may result in periodic declines in your investments as a trade off for potentially higher long-term growth.

Medium to High

If you are a client with a medium to high risk tolerance, then you are willing to accept fluctuations in your investment returns and declines in your investments in exchange for the potential of even greater growth in your investments as compared to a client with a medium risk.

High

If you are a client with a high risk tolerance, then your emphasis is on maximizing your growth potential and as such you are willing to accept large periodic declines in your investments in exchange for maximizing your potential returns.


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