Fifty-seven percent of investors described themselves as moderate in terms of risk tolerance
, while 20% each said they were conservative or aggressive.
Cognitive risk tolerance
is defined as an individual's ability to formulate and express one's ideas despite potential opposition, ridicule, or negative assessment in regard to reputation, integrity and honor (Charyton, 2005; Charyton, 2008).
The pattern among the bars in Figure 1 is quite clear: risk tolerance
differs across the three population segments.
Previously discussed literature has established that financial risk tolerance
is positively associated with knowledge of personal finance.
A more direct test of risk tolerance
as a possible cause for the gender difference in wages was conducted by Dohmen and Falk (2006), who found that risk-averse workers preferred fixed payments (safe payoff), whereas risk-tolerant workers preferred variable pay (uncertain payoff).
Researchers have also made inferences about women's risk tolerance
based on observed wealth accumulation and investment choices.
can influence the order in which the client selects options at this stage.
There are many types of risk, but with respect to an investor's risk tolerance
level, there are three basic types to consider:
Examining risk-taking attitudes and behavior among family business owners will increase the understanding of risk tolerance
in general and add to the literature on this topic.
Your risk tolerance
depends on many things, including:
Douglas Johnson, managing director at Merrill Lynch, looks at how to assess your investment risk tolerance
The tool kit also helps you determine your ideal asset allocaion by walking you through a quiz that gauges your risk tolerance
and time horizon.