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Understanding your financial risk tolerance

All investments have some degree of risk involved. Finding where you fit on that scale is critical to your financial success.

Too much financial risk can cause panic or sleepless nights but not enough risk could prevent you from getting where you want to go. It’s a risk vs. reward dilemma.

At the end of the day, whichever way the scale tips depends on you.  Your financial risk tolerance is based on many indicators specific to you and your lifestyle. Every person has a different comfort level.

Of course, it’s always best to talk to the experts—it’s our job to help you determine your risk tolerance. However, there are things about yourself that you can reflect on when trying to take an internal temperature about how much risk you can handle.

Personal factors to consider


Age is a large determining factor of risk. For example, a younger investor saving for retirement won’t need the money for a long time. Which means they can afford a rough year every once in a while.


Your investments should be catered to the length of time you have until retirement or the financial goal you’re saving for.


Your short, medium and long-term financial goals should all factor into how much risk you can handle.

Portfolio size

How much you’ve saved, your current income and future projected income will have an effect on the risk you’re willing to take on.

How life stages affect risk tolerance

A big indicator of how much risk you would want to take on depends on your current life stage.

    1.Early Career Accumulator

If you’re just starting your career, you may have not much to invest but you have the benefit of time on your side. Retirement is far away. This means you can afford to take on a higher risk over a longer period of time. It should also generate a higher return than a safer investment

    2. Mid-Career Accumulator

People in their 40s or 50s may be at the highest peak earning level with more money available to invest. Although risk tolerance may not be as high as an early career accumulator because you’re nearing retirement when you’ll have to withdraw your investments.

    3. Pre- Retirees and Retirees

Risk tolerance for this group is much less than the previous two stages.  There is a lot more concern about losing what you’ve accumulated so far. This is the time in your life were your beginning to think about pulling investments to supplement your monthly income.

What kind of investor are you?

Be objective when considering which one of these categories describes you best. If you’re having a hard time deciding where you fit, try and think about how your partner or friends might categorize you.

Low-risk tolerance aka conservative investor

This could be if you if you’re the type to lose sleep when your investments are on the decline. If watching the market’s ups and downs every day makes you uneasy then you’ll probably feel best if you choose investments that are on the safe side.


If you feel like small bumps in the road don’t bother you but you’d have a hard time working through the bigger and longer market slumps, you could have a medium tolerance.

High-risk tolerance aka aggressive investor

If you don’t mind consistent highs and lows or large market fluctuations you might have high-risk tolerance. This is good if you just want the most out of your investments over the long-term.

Let’s chat

Although the points made above might give you a better understanding of your risk tolerance, it’s always best the let the experts help you determine how much risk you can handle. So, give us a shout. Our financial planning team is here to help you achieve what’s important in your life.



The stuff we have to say.
Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products.  Only deposits held in Canadian currency, having a term of five years or less and payable in Canada are eligible to be insured under the Canada Deposit Insurance Corporation Act.  Coast Capital Wealth Management Ltd provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds. Mutual fund values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses may all be related with mutual fund investments. Important information about mutual funds is contained in the relevant fund facts and simplified prospectus. Please read the fund facts carefully before investing.
Dale Nguyen

Dale Nguyen

Certified Financial Planner, Coast Capital Wealth Management

Dale has 22 years of experience in the financial services industry and holds a Certified Financial Planning Designation. He specializes in easy-to-understand Financial Planning and Portfolio Management. When he’s not helping members reach their financial goals, Dale enjoys playing and coaching tennis.

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