Risk Tolerance is one of the most obscure topics in finance. It’s extremely personal and difficult to measure.
Our industry invests a lot of time, money, and resources to determine your personal risk tolerance. Why? Because the optimal investment plan (portfolio) is the one that you can actually stick with, not the plan that pencils best in a textbook equation. If it does not suit your sensibilities, whatever they may be, you won’t possess the discipline to see it through to your desired goals.
Historically, times of calamity have led investors to abandon their plan, which is why the finance industry seeks this clarity around your investing tolerance levels.
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