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What’s the best way to gauge an investor’s risk tolerance?

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TechnoPeasantx
TechnoPeasantx
22 days ago

Determining risk tolerance is a tricky thing.
Its unknowable until one has a meaningful amount (to them) at risk during a prolonged bear market and it changes with wealth, life stage and life events.

Scrooge_McDuck88
Scrooge_McDuck88
1 year ago

Look at their account history… proof is in the pudding!

Sanjib Saha
Sanjib Saha
1 year ago

What did they do during the height of a market turbulence (e.g., first half of 2020, last quarter of 2018, etc.)? Buy, Sell, or Do Nothing? I never knew my tolerance level until the 2008 financial crisis.

On a lighter note, there might be a (weak) correlation between risk tolerance and the frequency of checking portfolio balance. I have a feeling that people with high risk tolerance can go much longer without checking market performance 🙂.

Nicholas Clements
Nicholas Clements
1 year ago

If the investor sells at the first sign of a market correction then there’s little risk tolerance.

Andrew Forsythe
Andrew Forsythe
1 year ago

How well they sleep the night of a market crash.

Ben Rodriguez
Ben Rodriguez
1 year ago

I think JP Morgan said, “sell to the sleeping point.”

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