What Is My Risk Tolerance For Investing ?
Presented by Leslie Killgore
Investing has changed considerably over the last 30 years . Between technological innovation and the ever increasing access to information , the individual investor is more empowered today than ever before . However , with this great advancement comes a new set of behavioral finance issues , one of which involves the increasing difficulty of pairing risk appetite with a long term objective while ensuring an investor sticks to their plan .
For example , investors in the 80s and 90s would view their statements on a monthly , quarterly or year-end basis . Today , many investors review their accounts daily since access to balances is available instantly on personal devices . The exhaustion of constant observation can lead to poor decision making . This can cause distractions from their long-term objective due to the fatigue of obsessing over short term price swings . So how does one evaluate themselves to determine their true risk appetite versus falling into the trap of short term distractions ?
Leslie Killgore , CFP ® Financial Consultant
When the market is going up and up , it ’ s easy for investors to think they ’ re more comfortable with risk than they actually are . Eventually , though , volatility returns and stocks go into a swoon . That ’ s often when people discover their true risk tolerance . It ’ s better to determine at the outset the level of risk that ’ s appropriate for you and to be able to stick to your investing strategy — come what may . To help with this , you might ask yourself these three questions .
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