Knowing your risk tolerance is not optional — it’s the foundation of every sound investment decision. Investing without it is like driving blindfolded. Here’s how to understand it, measure it, and use it to make decisions that actually suit you.
Risk tolerance is how much investment loss you’re emotionally and financially able to handle. It’s your ability to sleep at night when markets drop — and still stick with your plan.
1. Conservative (Low Tolerance)
Prefers safety over high returns
Avoids losses at all costs
Chooses bonds, cash, and low-risk REITs
Example: Retirees, first-time investors
📊 Typical Portfolio: 20% stocks, 60% bonds, 20% real estate/cash
Comfortable with moderate fluctuations
Wants growth but with downside protection
Mixes stocks, bonds, and real estate
Example: Mid-career professionals
📊 Typical Portfolio: 60% stocks, 30% bonds, 10% REITs
The best way is to combine how you feel about risk (emotional response) with what you can afford to lose (financial situation). Take Krufaastik’s free quiz at Krufaastik.com/riskquiz — it evaluates age, income, goals, and mindset. You’ll get a personalized profile in minutes.
Absolutely. Major life events like having children, changing jobs, retiring, or experiencing a market crash can shift your risk appetite. It’s smart to reassess your profile at least once a year or after any big life event.
Not at all. The goal isn’t to take more risk — it’s to take the right amount for you. Some investors do better with steady, slower growth and peace of mind. Others thrive on volatility. There's no one-size-fits-all.