Assessing one's risk tolerance is an important part of making investment decisions. There are a few different ways to assess risk tolerance, such as by taking a risk tolerance questionnaire or considering one's age, time horizon, financial situation, and investment goals. Risk tolerance is typically categorized into three main categories: conservative, moderate, and aggressive. Conservative investors are more risk-averse and prefer safer investments with lower potential for growth but also lower risk of loss. Moderate investors have a more balanced approach, while aggressive investors are willing to take on more risk in exchange for potentially higher returns. Knowing one's risk tolerance can help guide investment choices.
