You filled out a risk questionnaire once, when you opened your account, and probably never looked at it again. But do you actually know how you’ll react if your portfolio drops 20%?
In this episode of Think Smart with TMFG, we unpack risk tolerance vs. risk capacity: what a risk questionnaire is really measuring, and why the answers people give in a calm market rarely hold up once one turns. We dig into recency bias, why investors overestimate their risk tolerance in good markets, and why fund flow data shows people moving into equities at the top and fleeing to cash at the bottom, exactly backwards.
We also cover the handful of life events that should actually change your risk profile: retirement, losing a spouse, or simply getting older.
📌 If it’s been years since you reviewed your risk profile, feel free to reach out. We’d be happy to help you through those decisions:
🎧 Listen to the full episode on YouTube.
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