When it comes to investing, it is important to have a portfolio that matches your risk tolerance. Your risk tolerance refers to the level of volatility and potential loss that you are comfortable with in your investments. It is important to align your portfolio with your risk tolerance in order to ensure that you are comfortable with the potential ups and downs of the market.
Assessing your risk tolerance is an individual endeavor and can involve considering factors such as your age, financial goals, and the amount of time you have until you need to access your invested funds. Oftentimes, people's perceived risk tolerance does not align with the actual risk level of their portfolio. For example, someone in their sixties might consider themselves to be a moderate investor, but their portfolio could be very aggressive with a high percentage of equities. It is important to carefully review your portfolio and ensure that it aligns with your true risk tolerance, rather than just your perception of it.
It is essential to carefully assess and understand your risk tolerance in order to make informed decisions about how to allocate your assets. By aligning your portfolio with your risk tolerance, you can feel more comfortable and confident in your investments, even during market downturns.