Thread by @TihoBrkan

1/ Do you track your current net worth? Have you been tracking your returns achieved throughout your investment career?

Your current financial situation determines your risk capacity (the level of risk you can AFFORD to undertake).

2/ Have you written out your financial objectives? Where do you want to be in 5, 10 or 25+ years from now? How well do you understand compound interest?

Risk requirement means that there will be degrees of RISK directly correlated with the return you desire to achieve.

3/ Finally, while we can measure your risk capacity (how much you can afford to lose) & your risk requirement (how much risk you have to undertake to achieve the return) — it is very difficult to figure out your risk tolerance (your comfort level).

How strong is your stomach?

4/ I can look at your current wealth situation and your future objects/goals and tell you the following quite easily:

1. you can afford this much risk
2. to achieve your goal, you have to take this much risk

But number 3, your risk tolerance... that's the one that counts!

5/ In the end, investing has very little to do with the brain, the planning & analyzing... and a whole lot to do with your stomach.

6/ How much risk can you truly handle?

Do you have emotional intelligence? What is the level of self-control when it comes to handling large amounts of real money?

How much experience do you have at losing real money? How does your behavior change under such pressure?

This 👆

7/ When things go wrong, the wishful financial plan you have in writing and the high conviction thesis you wrote out for investment opportunity will all be out of the window for 99% of you.

Everyone has a plan until...