Dissertation (MSc. Accounting and Finance)This study presents the assessment on the factors affecting individual investors’ risk tolerance, particularly in Tanzania using the case of CRDB and Tanzania Cigarette Company (henceforth TCC). The main objective of this study is to assess factors affecting risk tolerance of individual investors. The study used a sample of 80 respondents from the selected companies. In addition, the study used secondary data which were obtained from different literatures such as reports, published and unpublished papers and other related documents. Descriptive statistics, factor analysis, and linear regression were used to check both association and influence of demographic and psychological factors on individual investors’ risk tolerance. The study had two specific objectives; the first objective was to assess the effect of the demographic factors on the individual investor’s risk tolerance at CRDB and TCC whereby variables involved were gender, age, education, income, marital status and number of dependents. The findings reveals that age, education, number of dependents, marital status and employment were statistically insignificant to the risk tolerance of individual investors while income and gender were statistically significant and had a positive relationship with the risk tolerance of individual investors. The second objective was to examine the effect of psychological factor on the individual investor’s risk tolerance at CRDB and TCC whereby variables used include overconfidence, loss aversion and mental accounting. The findings show that overconfidence, loss aversion and mental accounting were positive and significantly related to the risk tolerance of individual investors. This study recommends that stakeholders should take into consideration key factors such as gender and income, loss aversion, mental accounting and overconfidence in investing in companies. The study further recommends that, the Government and Regulatory Authority should make use of the findings obtained from this study when formulating and implementing various policies related to investment decision.