Patience, Not Panic, for Long-Term Financial Security

2. Understand Your Risk Tolerance

All investments come with some risk of loss. Conservative investors, those with low-risk tolerance, prefer investments that are more likely to preserve their principal. Aggressive investors take on the risk of losing money to gain potentially higher returns on their principal. Knowing your risk tolerance[https://www.investor.gov/introduction-investing/getting-started/assessing-your-risk-tolerance] is an essential component of your overall investment strategy. Free online questionnaires can help you determine how much of a chance you want to take with your investments. Stock simulators also help you identify your risk tolerance. These programs let individuals manage virtual cash and experience how the stock market works.