In the investment world, your stock risk tolerance is the level of variability in the value of your investments that you are willing to withstand as an investor. The more willing you are to take a risk and lose your money, the higher your tolerance is. Keep in mind that riskier investments may come with a greater payoff, but also include a higher chance of investment loss.
What is Your Stock Risk Tolerance Based On?
Whether you are just starting to invest or are a seasoned investor, you and your stockbroker should discuss your goals thoroughly. Your risk tolerance might vary based on your age, income, future earning capacity, or liquidity needs or whether you live on a fixed income from a pension or social security.
What is the Responsibility of Your Stockbroker?
Regardless of your tolerance, it is incumbent upon your stockbroker to provide you with a full assessment of any particular investment and the potential for both risk and reward. If your broker fails to disclose material information related to the risk of an investment, or if your stockbroker fails to invest according to your risk tolerance, then he or she, or the brokerage firm they work for, may be liable for mismanaging your investments.
If you have suffered an investment loss because your broker omitted material information relating to the risk of a particular investment, or invested your money in contravention of your risk tolerance, contact the attorneys at Dimond Kaplan & Rothstein, P.A. We represent investors who have relied on their broker and brokerage firm to give you accurate information about the risks of investments and to prudently manage their assets, and you may have certain legal rights that require your immediate attention if they fail to do so. Contact us to schedule an appointment or consultation today.