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Search for an ETF or holding
Search for an ETF or holding
Updated 2mo ago.
Updated 2mo ago.
Risk tolerance is your emotional and financial ability to handle fluctuations in the value of your investments. It determines what proportion of stocks and bonds should make up your portfolio.
If a 30% drop in your portfolio would cause you to panic-sell, you have a moderate risk tolerance — a balanced ETF like VBAL.TO (60% stocks, 40% bonds) would be appropriate. If you can sleep soundly through a market crash, VEQT.TO (100% stocks) might suit you. Robo-advisors like Wealthsimple ask questions to assess your risk tolerance.
The biggest enemy of a beginner investor is panic. If you choose an overly aggressive portfolio and sell during a correction, you lock in your losses. It's better to hold a slightly more conservative portfolio for the long term than to abandon an aggressive one at the first dip.