Risk Tolerance
How much portfolio pain you can stomach — and afford — without abandoning your plan. It is part psychology, part math, and most people overestimate it.
By Findley's Finance · Last reviewed: September 2026
Why it matters
Everyone has high risk tolerance in a bull market; the truth comes out in a 30% drawdown. Real risk tolerance has two components: the emotional ability to hold through drops, and the financial capacity to wait years for recovery. A retiree spending the portfolio cannot afford the same swings as a 25-year-old. Set your allocation for the worst market, not the current one.