Assessing risk tolerance is a lifelong conversation

IN THE world of investing, volatility is the norm. Markets rise and fall, and even the most seasoned investors may find themselves gripped by fear in the face of sharp declines.

Many investors say they are comfortable with risk – until the market drops 30 per cent. That is when the real test begins. I have seen this in the course of my nearly three-decade career.

In such moments, whether one stays invested or panics and sells often hinges on something far more personal than market data – one’s personal risk tolerance. The real danger is not market volatility; it’s the mismatch between how much risk you think you can take and how much you can actually live with when things go south.