Understanding Your Risk Tolerance

Before you begin searching for the best investments for your financial goals, it's smart to understand your risk tolerance.

Contact Us

Investment - Risk Tolerance Content-371755-edited.jpg

Risk is Something We Tend to Avoid

Especially When it Comes to Investing


When it comes to financial planning, the concept of risk is actually something of which each of needs to be aware.


Your personal risk-tolerance is often determined by answering some simple questions and supplying basic personal data like age, years to go before retirement, health/marital status, income, etc. While the dynamics between risk and one’s personality are too great to adequately address here there are some points worth considering.


Whether you’re a middle-aged professional focused on accumulating wealth or a retiree or pre-retiree working to preserve what you and your spouse have earned or wondering how to best leave a legacy for your grandchildren, the concept of risk automatically evokes responsibilities and personal emotions as people often demonstrate different attitudes towards it.


As frequently discussed in our offices, the psychology behind risk and one’s reactions to it are complex and tricky to maneuver. Some who come into money either gradually through their own perseverance or suddenly, i.e. through an inheritance, settlement or real estate sale will view risk one way. Others say depending on how one was raised will determine attitudes, perceptions and reactions. While one’s risk tolerance can help determine how they may behave financially there are also different risks behind various investments.


Minimizing Risk    

It is impossible to entirely remove risk from any investment. Each investment has some degree of risk. The goal to successful investing is to understand your personal level of risk. This is known as “risk tolerance,’ and invest accordingly.


The element of risk being present in investments does not mean you will lose all of your money. This is obviously a worst-case scenario although always a possibility. Generally speaking, however, an advantageous return on your investment may not be possible without some risk, meaning it’s possible that you may lose some of your original investment or principal. Asset allocation is one way we aim to exercise some control over how we invest.


Risk is a fact of life for investors. How we manage it is reflected in investment returns.


Background image with buildings and urban scenes.jpeg

Latest Financial Services Blog Posts

Financial Planning articles to offer advice and help on many different topics.

Retirement Planning Strategies for Young Investors

Keep in mind that how you handle your money today may affect how you live tomorrow. Also note that it’s a common mistake to think that one needs a lot of money in order to invest and/or save for

5 Components of a Successful Retirement Plan

Retirement planning does not need to be complicated or overwhelming. In fact, in many ways it can be surprisingly simple, even fun at times as you‘ll see here. While individual situations vary, the

Close up of business man hand working on laptop computer with social media diagram and chart graph on wooden desk as concept.jpeg

Get in Touch with Us Today!


Contact Us