The first step in building your portfolio

Key Points Your psychological risk appetite is the basic foundation on which a portfolio is built Over-estimating your appetite for risk can be much more costly than underestimating it We highlight three key criteria for making a self-assessment What’s the first thing you should do when constructing your portfolio? Virtually all practitioners (including us) agree that it is honestly assessing your own tolerance for risk. Conventional industry wisdom defines risk as ‘volatility’; the amount the price of an asset moves around. To us, the financial nature of risk is more nuanced and we’ll discuss it in depth next week....

What’s the first thing you should do when constructing your portfolio? Virtually all practitioners (including us) agree that it is honestly assessing your own tolerance for risk.

Conventional industry wisdom defines risk as ‘volatility’; the amount the price of an asset moves around. To us, the financial nature of risk is more nuanced and we’ll discuss it in depth next week.

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