How do I know how much investment risk I can handle?

Question

For context, I have been investing long enough to know that market declines make me uncomfortable, but I also have long term goals that require growth. For context, my accounts include retirement savings and money that may be needed much sooner. The online explanations I found are fairly broad, but they seem to assume facts that are different from mine.

Soradin · Accepted Answer

Consider both emotional comfort and whether a market loss would prevent you from meeting essential goals. For the household plan, risk tolerance is the ability and willingness to accept investment losses while staying committed to a plan. For the household plan, it should be considered together with time horizon, income needs, reserves, goals, and the financial consequences of a decline.

How do I know how much investment risk I can handle?

Soradin

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