Some investors won’t bat an eyelid if their portfolio crashes 25-30 per cent and others worry even if it is down just half a per cent: Tolerance for risk is shaped by experience, personality and money at stake.
What should investors with low appetite for risk do? Should they take exposure to stocks or equity funds?
Before we get there, I want to contrast between risk-taking ability and risk tolerance/appetite.
Risk-taking ability depends on age, net worth, cash flows, financial goals, family situation and other factors.
Let’s say A and B need Rs 1 crore for retirement. When they do,