What is Your Risk Tolerance?
Know yourself before you start risking your money
At 60 years old, a couple of years before retirement, my dad asked me: “Do you think I should just put all my savings in Bitcoin, it’s gone up so much, seems like everyone loves it and profits a lot?”. Oftentimes, we cannot see our own irrational optimism. Like hoping that we can compensate in a year or two for missed wealth accumulation opportunities of over 40 years by betting on an ultra-risky portfolio, or worse yet, a single risky asset. It may or may not pay off, of course, but is that the rational thing to do, if you consider all potential outcomes? If the asset has the ability to crash over 40% in price 9 times within a 10-year period, can you, given your current stage of life, circumstances, and goals, take such a loss (or multiple losses)? That is precisely why you need to know how much risk you can — and cannot — afford to take.
This post is for educational and information purposes only and expresses the author’s opinion. It is not intended as investment or financial advice. If you like this story, follow me here on Medium, on social media, or subscribe for free on my website: https://moneycraft.org.
