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An individual's human capital, or stability in employment and income, also significantly affects their ability to take risks. Stable income can facilitate a tendency toward more aggressive investing strategies, while sporadic income may necessitate more conservative approaches.
The Need for Risk
After establishing behavioral loss tolerance and risk-taking ability, investors must assess their need to take risks. Even individuals with high capacity for risk may not need to endure a great deal of it if their financial goals can be achieved through less risky options.