Unit 4 · Level 1 · Know thyself
Your risk personality
The Investing course split risk into three dials. Capacity: what your finances can absorb (pure math). Tolerance: what you can hold without panic-selling (pure emotion). Need: the return your goals require (planning). Your real risk level is set by the LOWEST dial, and self-knowledge means knowing which one that is for you.
Free to play. No ads, no token, no account needed to start.
What you get asked
Match the dial to what it measures
Portfolios blow up when one dial gets ignored, usually tolerance, because it only reveals itself in the middle of a crash.
A 25-year-old with a stable job and 40 years of runway panic-sold everything in the last 20% dip. Which dial is their real constraint?
On paper their capacity is huge; in practice their tolerance sets the limit. A portfolio you sell at the bottom was never right for you.
What your finances could survive losing is your risk ___.
Capacity is arithmetic: income, savings, time horizon, obligations. It doesn't care how brave you feel. That's tolerance's department.
Your tolerance says 100% stocks, but the money is a house deposit you need in 2 years. Which dial wins?
Stocks can easily be down 30% in year two, and courage doesn't shorten a recovery. Short-horizon money has low capacity no matter how calm you are.
Why does knowing your own risk personality beat copying someone else's portfolio?
The best portfolio on paper is worthless if you abandon it mid-crash. The one you can actually hold through fear is the one that compounds. 🐜
The rest of this unit
Tilt lights, risk personality, and an honest audit: meet the trader in the mirror.