What Is Risk Tolerance?
Risk tolerance refers to how much risk you are willing to take with your investments. All investments have risks, so knowing your comfort level can help you pick investments wisely for your financial goals.
Investments that have more risk, such as stocks, can come with potentially more gains, but also more losses. At the end of the day, investing can be a balancing act between risk and rewards.
Time Matters for Taking Risks
An important element for your risk comfort level is how much time until you’ll need the money. Generally, the longer you have to invest, the more risk you can take because you have time to recover from losses.
Know Your Risk Tolerance
A risk assessment can help you get a good idea about how much risk you should have in your portfolio. It starts with understanding what kind of risk taker you are—from very conservative to very aggressive. And it can help you choose different investment types and how much of each to allocate in your portfolio (your asset allocation).
Choosing appropriate assets according to your risk tolerance can help you maintain your investment strategy and stick with your plan, even in turbulent market times.
These have nothing to do with your personality and everything to do with how much risk you are comfortable taking.
Ready to Get Started?
There are two ways to get your risk assessment, both by answering a few quick questions. Choose the one that works best for you and where you are on the investing journey.
Do It Yourself
Know how much investment risk you want to take by answering a few key questions about your comfort level and timeline. Based on your answers, you’ll receive a risk analysis that can help you choose your investments.
Get Digital Advice
Receive a recommended portfolio by answering a few key questions about your risk comfort level and timeline. The portfolio is managed by our professionals and has their best thinking behind it.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
Digital Advice is provided by American Century Investments Private Client Group, Inc., a registered investment advisor, for clients with a minimum $10,000 investment. Digital Advice provides discretionary investment management. American Century does not charge an advisory fee for this discretionary advice. The Journey Portfolios offered through Digital Advice all contain American Century exchange traded funds (ETFs) and mutual funds, which charge investors investment management fees, underlying fund fees, and other administrative and servicing fees. Depending on the different weightings or allocation of such ETFs and mutual funds, your fees for investing in a Journey Portfolio will vary, but generally range from 0.25% to 0.40% per year. American Century Investments' financial consultants do not receive a portion, or a range of the advisory fee paid by clients. Client-oriented trades outside of our recommendations, personal consultations by phone or in-person with our financial consultants, and other activities like wire transfer fees are offered for an additional fee.
All investing involves risk.