Risk Tolerance... or Loss Aversion?
Risk Tolerance is a phrase that gets thrown around a lot in the typical financial world.\xa0Your risk tolerance\xa0is defined as the degree of variability in investment returns that you are willing to withstand.
But this really doesn\u2019t specify the amount of money you are willing to risk in order to possibly make a certain amount of money. In other words, how much money are you going to gamble with?
Of course, just because you gamble with more and more money, that doesn\u2019t mean you will make more, or even any, money in return.
Sadly, it seems that many \u201crisk tolerance\u201d measures are just a new-fangled way of throwing your money away. Here\u2019s what you want to know instead:\xa0What is your Loss Aversion?\xa0Listen now to find out.
Resources:\xa0Podcast Interview with Dr. Paul Cleveland