Financial Risk Tolerance

Definition

Financial Risk Tolerance (also Risk Appetite) in the context of indivuduals (Personal Finance) denotes the degree of risk the individual is willing to accept while pursuing their financial goals.

Importance

Risk tolerance is an important factor in:

• Financial Planning
• Investment Suitability Analysis
• Selection of mortgage type
• Debt versus Savings
• Management of Credit Card Debt
• Other consumer decision issues

See Also

• Risk Appetite (In institutional context)
• Financial Literacy