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Saving, Managing Debt, and Budgeting

Risk / Reward

Does my tolerance to risk depend on my age or stage in life?

It is commonly thought that younger people should be more tolerant of risk, for a few good reasons. When you are younger, you may have the opportunity to earn and keep earning money to replenish any losses you may incur. You also have a much longer time horizon in which to offset your losses with gains, should you make an improper investment decision. People nearing retirement may need access to their portfolios in order to provide daily income—and therefore would likely have less tolerance for risk—than someone in his twenties who has many decades of earnings and returns ahead of him.



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