Every person has a problem tolerance which is dangerous if ignored. Good stock broker or financial advisor understand this, and we should provide the effort to reduce risk you are tolerating. Then, they should go on with you to find out investments that do not increase your risks in investments.
Defining person’s risk tolerance includes many things that are totally different with each other. From the begining you must know how much money you want to invest, and what are the goals behind your investments.
For a time, if you decided to retire in coming ten years, and you are failed to save the money at the end, then you are in high risk tolerance – you have work on aggressive way you need to tolerate it when you don't have work.
Several part of the coin, if you are earliers 20 in your retirement time and you need to begin investing for your retirement, then after retirement your risk tolerance will be low. Your money will grow slowly with your retirement time as coming.
Before starting any work you should have to decide your future plans what you will do after retirement so planning wisely will help you to reduce risk tolerance.
For small time, if you begin stock market and see you stocks daily and you came to know is slightly going down then what you will have to do ?
Do you think to sell it out or wait for the money to ride ? Understand the tolerance if stock goes very much down and no chances for going up then you can sell it otherwise you wait when your stock goes on increasing.
Better financial planner or stock broker always help you to decide the risk of your stocks when it has to be sold out when new stocks should be applied.