A number of finance-related websites have little quizzes that you can take to determine your risk tolerance when it comes to investing. These sites typically ask questions about your age, income, family obligations, and how you would react to certain market events.
My wife and I are, for the most part, patient and rational buy-and-hold investors, and our responses to these questions typically peg us as having moderate to high risk tolerance. This is in large part due to our view that market nosedives represent buying opportunities. That being said…
Imagining a 40% stock market decline and living through one are two totally different things. I’d be willing to bet that a large fraction of people that had previously considered themselves to be risk tolerant investors have changed their tune, and haven’t been ‘walking the walk’ over the past few months.
For our part, we’ve continued making our regular contributions, and have even actually ratcheted up contributions to our taxable investment account (we’re already maxing out our retirement accounts).
What about you?
How have you been reacting to the recent market turmoil? Are you proving to be as risk tolerant as you originally thought?