Each man or woman has a risk threshold that should not be ignored. Any good stock broker or financial planner will know this, and they should try to help you determine what your risk tolerance is. Then, they should work with you to find investments that do not overrun your risk tolerance.

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

For instance, if you plan to retire in ten years, and you've not saved a single penny towards that end, you should have a high exposure tolerance - because you will need to do some aggressive - risky - investing in order to achieve your financial goal.

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

Bear in mind 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 feel about risk. Again, there is a lot in figuring out your tolerance.

For instance, if you invested in the stock market and you watched the movement of that stock daily and saw that it was dropping a bit, 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 high tolerance, you might let your money ride and see what happens. This is not based on what your financial goals are. This tolerance is based on how you perceive 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 decide your investments suitably.

Your risk tolerance should be based on what your financial goals are and how you look at the probability of losing your money. It's all tied in together.

A good financial planner can also advise you on the risk factors associated with different type of investment vehicles such as venture capital and seed money investing versus putting money in a company going public, or perhaps a reverse merger, or other public mergers.

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