Critically Important Section. Please Read Carefully.
People often have different risk tolerances for different accounts. The amount of risk you take likely determines the success or failure of your investing experience.
Select a level of risk that you may be able to endure during very bad circumstances when your friends, family, and the media are all panicking. Examples include the dot com bubble burst of 2000, the financial crisis of 2008, and the coronavirus pandemic of 2020.
Remember how you felt and even more importantly what you did during prior market declines. If you sold when your account fell by 25%, then you may want to consider taking less than 25% Real Risk with these investments.
The Risk Meter is designed to help you decide how much risk you can psychologically tolerate without capitulating by selling your investments. It does not help determine how much risk you can endure from a financial or income need perspective. We recommend a complete financial plan to determine your financial risk capacity, especially if you plan on income from your investments within the next fifteen years.
Historically, your investments are likely to grow more if you select a lower amount of risk that you can tolerate without panic-selling rather than a high amount of risk that causes you to buy high and sell low, i.e. mistime the market. Taking a little less risk than you can tolerate may only cause a little lower return each year, but taking too much risk and panic-selling might cost 30% of your investment value in one year.