Each person has a risk threshold that should not be ignored. Any good stock broker or financial planner recognizes this, and they should try to help you determine what your risk tolerance is. Then, they need to act with you to find investment vehicles that do not go beyond your risk tolerance.

Determining one's risk limit involves several different things. First, you should know how much funds you have to invest, and what your investment and financial objectives are.

For instance, if you are retiring in ten years, and you've not saved any money towards that end, you must have a high exposure tolerance - because you will need to do some aggressive - risky - investing in order to attain your financial goal.

On the other hand, if you are in your early twenties and you want to start investing for your retirement living, your risk tolerance will be lesser. You can afford to observe your money grow slowly over time.

Understand of course, that your requirement for a high risk tolerance or your need for a low risk tolerance really has no bearing on how you consider risk. Again, there is a lot in figuring out your tolerance.

For instance, if you invested in the stock market and you observed the movement of that stock day by day and saw that it was declining a little, what would you do?

Would you trade out or would you let your money ride? If you have a low tolerance for risk, you would want to sell out... if you have a higher tolerance, you might let your money ride and see what are the results. This is not driven by what your financial goals are. This determination is based on how you look at your money!

Again, a good financial planning consultant or stock broker should help you determine the level of risk that you are comfortable with, and help you select your investments suitably.

Your risk tolerance should be according to what your monetary objectives are and how you perceive the probability of losing your money. It's all tied in with each other.

A good financial planning consultant can also advise you on the risk elements related to various kind of investment vehicles such as venture capital and seed money investing versus making an investment in a company going public, or perhaps a reverse merger, or other public mergers.

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