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Week of November 9th, 2007 •    Archive

Ms. Sabella has managed MainStay Balanced Fund since its inception in 1989. She is a Managing Director and has been with NYLIM since 2000. Prior to that, she worked at Towneley Capital Management, Inc. for 22 years. Ms. Sabella is a member of the Financial Planning Association, Financial Women's Association, and the CFA Institute. She holds a B.B.A. from Baruch College, is a Certified Financial Planner, and is a Chartered Retirement Planning Counselor.

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Q:Now that I have decided to start investing, I've heard a lot about risk tolerance — can you explain that concept in plain English?

A: Risk tolerance is the degree of uncertainty that an investor can handle with a volatile market.

The suitability of an investment varies according to someone's risk tolerance, age, income requirements, and their investment goals. Generally, the younger the investor, say a 30-year-old, the more risk she could take on since there is a longer time horizon to accumulate wealth even with some market declines. Someone with a low risk tolerance is considered a conservative investor while someone with a high risk tolerance is considered an aggressive investor. Many investors lie between the two and are considered moderate investors. There are many online tests to determine one's risk tolerance.

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