What are the factors that determine the risk tolerance level for investors?

IB D

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When it comes to investments, risks are part of it. There are low risks investment and high risks investment. Some people can take a very high risk in investment while some like to play safe and do it easy.
What are the factors that determine the risk tolerance level of a person when it comes to investments..
 

nomad

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Everyone has his or her own risk tolerance level. You need to identify your risk tolerance level before you can start investing. Your risk tolerance level depends on your financial conditions and income source.
 

IB D

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Everyone has his or her own risk tolerance level. You need to identify your risk tolerance level before you can start investing. Your risk tolerance level depends on your financial conditions and income source.
When a person has much money, he or she can afford to take high risks. That's why you see billionaires making risky investments that an ordinary person can't make.
 

nomad

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True indeed. Musk invested a lot of money in bitcoin and made losses worth millions of dollars and he is still one of the richest men on earth. A normal man/woman cannot even make a loss worth thousands, it will be difficult to pay the bills.
 

Stardom22

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I think the risk tolerance level in investments depends with the individual investors.
However most people tend to invest highly in portfolios that seems guaranteed to bring forth a good profit.
 

IB D

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True indeed. Musk invested a lot of money in bitcoin and made losses worth millions of dollars and he is still one of the richest men on earth. A normal man/woman cannot even make a loss worth thousands, it will be difficult to pay the bills.
If a normal man makes 100k on Bitcoin and it crashes, the man would contemplate suicide. That's why the rich would keep on getting richer. They make big investments.
 

riberet19

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The fact that a person has more risk aversion or is not within his personality or his goals, if you want to make a lot of money having a low capital you should take more risk if you want to get there, otherwise you will have to invest with a more moderate risk and invest little by little and increasing the mass of cash flow to the investment
 

IB D

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The fact that a person has more risk aversion or is not within his personality or his goals, if you want to make a lot of money having a low capital you should take more risk if you want to get there, otherwise you will have to invest with a more moderate risk and invest little by little and increasing the mass of cash flow to the investment
This is a good strategy to use when doing high risk investment with a low risk tolerance level. It gives you the room to build your risk tolerance level gradually.
 

riberet19

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This is a good strategy to use when doing high risk investment with a low risk tolerance level. It gives you the room to build your risk tolerance level gradually.
Yes it is better to indentify what is your risk aversion and decide in what assets to invest knowing your financial possibilities too to dont do things you can regret later to tell you the truth
 

nomad

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If a normal man makes 100k on Bitcoin and it crashes, the man would contemplate suicide. That's why the rich would keep on getting richer. They make big investments.
A lot of people believe that crypto is for a layman as you can invest a small amount and can still profit. However, this is not true. Just like other market, crypto is also basically for people who have a lot of money for investment/.
 

IB D

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Sincerely speaking, your financial capacity determines your risk tolerances level. A poor person would always play safe with investments because he know that if he loses, he loses all. A rich man worth 10 million can easily throw in 2 million to invest and close his eyes. In his mind, anyhow it turns out, he still has 8million left.
 

Golden9

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You should consider the amount of capital you have and how long and hard you worked for it to help in assessing your risk tolerance.
 

IB D

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You should consider the amount of capital you have and how long and hard you worked for it to help in assessing your risk tolerance.
That could be a good consideration though. But if you really want to take it into perspective, you would never invest in anything. That's because money is always gotten through hardwork.
 

Bisolami

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When a person has much money, he or she can afford to take high risks. That's why you see billionaires making risky investments that an ordinary person can't make.
This is true and this simply falls back at investing the amount of money that you can lose.
 

Stardom22

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I think the main factor that determines the tolerance risk level for an investment is the amount of capital required for the particular investment portfolio. The higher the capital means the higher the profits or return on investments and hence more riskier.
 

IB D

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Yes it is better to indentify what is your risk aversion and decide in what assets to invest knowing your financial possibilities too to dont do things you can regret later to tell you the truth
You have to view investments as gambling. With this approach, you invest only what you can comfortably afford to lose. Doing too much is the reason shock kills people when investments fail.
 

Magnus2022

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One of the factors that determine the level of tolerance level is availability of funds. If you are as rich as Elon Musk, your tolerance may be high. Another factor that determines tolerance level is greediness. Many investors are been controlled by the greed which is bad.
 

riberet19

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You have to view investments as gambling. With this approach, you invest only what you can comfortably afford to lose. Doing too much is the reason shock kills people when investments fail.
But if you see them as gambling, they will give the same result as gambling, in games of chance there really is little intrinsic value to study, in investments what benefits you and gives money thanks to your investments is to find that intrinsic value in a security/asset that hasn't paid off yet in price terms, we can't look at it the same way, unless you're into trading, then we might look at it that way.
 
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