Okuzeka
Investing & the Stock Market vocabulary · Portfolio & Risk

Risk tolerance

Meaning in investing & the stock market, with examples

/ˈrɪsk ˌtɑːlərəns/nounCommon term

In investing & the stock market, risk tolerance means: How much loss or how big a swing in value an investor is willing and able to accept in exchange for the chance of higher returns.

In Turkish: risk toleransı, risk taşıma kapasitesi

How it is used

Advisers and brokers assess a client's risk tolerance with questionnaires before offering products. People describe it as low, moderate or high. It depends on age, income, goals and personality. In Turkey, brokers use suitability tests (uygunluk testi) for this purpose.

Example sentences

  1. A portfolio of 90 percent stocks only makes sense for someone with a high risk tolerance.

  2. Her risk tolerance fell after she started saving for a house.

Common collocations

  • high risk tolerance
  • low risk tolerance
  • assess risk tolerance
  • risk profile
  • risk appetite
  • asset allocationThe way an investor divides money between different types of assets, such as shares, bonds, gold and cash, based on goals, time and attitude to risk.
  • volatilityHow much and how quickly the price of an investment or a market moves up and down. High volatility means large, frequent price swings.
  • diversificationSpreading money across different investments, sectors, countries or asset classes so that a loss in one of them has a smaller effect on the whole portfolio.
  • investorA person or organisation that puts money into shares, bonds, funds or other assets in the hope of earning a profit or income over time.

More terms: Portfolio & Risk

Practise with graded reading

Reading at the right level is the fastest way to make new words stick. Pick free English books by level:

This page explains English vocabulary for learners. It is not financial advice.