Different investors have different risk tolerances. Much of the difference stems from time horizon. That is, someone with a short investment time horizon is less able to withstand losses. The remainder of the difference is attributable to the individual’s appetite for risk. Volatility can be nerve-wracking for many people, and they are more comfortable when they can avoid it. However, there is a relationship between risk and return. Investors need to recognize this risk/return trade-off. The following risk tolerance questionnaire is designed to measure an individual’s ability (time horizon) and willingness (risk tolerance) to accept uncertainties in their investment’s performance. The total score recommends which of five distinct risk profiles is most appropriate for the investor.