How Much Risk Is Right for You?

July 24, 2022
Every investor wants to maximize return—but you must first consider how much risk you can stomach.

Listen on Apple Podcasts, Google Podcasts, Spotify or copy to your RSS reader.

Transcript Open new window

After you listen

  • For more information on risk tolerance and investing, talk to your financial advisor or a Schwab representative at 877-279-4476.
  • And check out informative articles on a variety of investing topics at Schwab.com/Learn.
  • For more information on risk tolerance and investing, talk to your financial advisor or a Schwab representative at 877-279-4476.
  • And check out informative articles on a variety of investing topics at Schwab.com/Learn.

Balancing the trade-off between risk and return is one of the most fundamental decisions an investor makes. But it can be difficult to "know thyself" and truly understand your risk tolerance. Myriad psychological factors may cause you to behave differently than your stated risk profile when confronted with market volatility. And beyond weathering the ups and downs of the market, there are other types of risk that can impact the pursuit and achievement of your financial goals.  

In this episode, Mark is joined by Susan Hirshman, CFA®, CFP®, CDFA®—director of wealth management for Schwab Wealth Advisory. Susan shares her perspective on risk from her years working as an advisor to high-net-worth and ultra-high-net-worth investors. Susan and Mark discuss the difference between risk tolerance and risk capacity, how to determine your true risk tolerance, and how a wealth management plan can help you stay the course when your risk tolerance is tested.

Follow Financial Decoder for free on Apple Podcasts or wherever you listen.

Financial Decoder is an original podcast from Charles Schwab. For more on the series, visit Schwab.com/FinancialDecoder.

If you enjoy the show, please leave us a rating or review on Apple Podcasts.

New to risk and investing?

Breaking Bad Trade Behaviors

How to curtail emotional biases and take a more considered approach to your trading decisions.

Exchange-Traded Notes: The Facts and the Risks

Exchange-traded funds (ETFs) have been around since 1993, and there's no doubt that they are popular with investors. Exchange-traded notes (ETNs) may have a similar sounding name, but ETNs are not the same as ETFs, and they carry some important risks to be aware of.

Dollar-Cost Averaging vs. Lump-Sum Investing

Is dollar-cost averaging better than lump-sum investing? Find out which approach may be best and could be worth considering.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.  Supporting documentation for any claims or statistical information is available upon request.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Investing involves risk including loss of principal.

Please note that this content was created as of the specific date indicated and reflects the author’s views as of that date. It will be kept solely for historical purposes, and the author's opinions may change, without notice, in reaction to shifting economic, business, and other conditions.

Apple Podcasts and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries.

Google Podcasts and the Google Podcasts logo are trademarks of Google LLC.

Spotify and the Spotify logo are registered trademarks of Spotify AB.

0722-20N2