Risk Capacity + Risk Appetite + Risk Tolerance = Overall Risk Profile

Understanding risk appetite, risk capacity and risk tolerance is very important before making any investments or any investment decisions.

Factors Affecting Personal Risk Profile

Risk taking capacity, appetite and tolerance changes depending upon various information and factors. This can be understood with the help of following points:-

Difference between Risk Appetite, Risk Capacity and Risk Tolerance

The investment choices that an individual makes should be aligned to their financial risk profiles. The risk profile defines how much risk that particular investor is willing and able to take.