The IRS has more information on these plans. Investment tolerance is the amount of risk you are willing to assume in order to get a return on your investments. The more risk you take, the better your chances of a greater return. Studies have shown that women are inclined to have lower investment tolerance than men. In addition, women tend to keep familiar, higher-risk investments longer, which can help achieve higher returns in the long run.
Conservative investors prefer returns with little or no risk.
This investment tolerance is fine for those who are very close to retirement or are already retired. If retirement is decades away, inflation will become your enemy. In order to deal with this problem, a little more risk taking will be needed. Mutual funds are a wonderful way to deal with low risk tolerance because the risk is spread out into different stocks or corporate bonds. Also, choosing familiar companies stocks, like Walgreen, GE and Wal-Mart, can help ease the fear of losing your money.