Page 91 - Intelligent Investing (3)

Risk Tolerance

● The amount of risk an investor is able and willing to take in their portfolio

● More risk leads down one of two roads. High profit margins or a big loss -

Emerging markets, international stocks and new/small cap stocks

● Aggressive investors will put 80% or more of their portfolio to stocks and the

remaining 20% into bonds or index funds

● Vice Versa you can put 80% -100% into index funds

● Short term bonds are recommended over long term bonds

● Stocks generally carry more risk with greater reward while index funds and

bonds have greater safety with less reward