To decide how much to invest in each stock in your portfolio, the most important step is to understand how much money you are willing to lose.

Risk tolerance is how comfortable you are with potentially losing money on your investments 📉

Risk tolerance has multiple levels that are vaguely grouped into the following buckets:

Conservative, Moderate, and Aggressive

🟢 Conservative investors aim to preserve their money rather than significantly grow it.

They are okay with their portfolio going down 0% to 5% in a given month.

🟡 Moderate investors seek to prevent large losses, but also look for opportunities for higher returns.

They are okay with their portfolio going down 3% to 8% in a month.

🔴 Aggressive investors are okay with the possibility of larger losses in exchange for potentially larger gains.

They are okay with their portfolio going down 7% to 12% in a month.

Now it’s your turn!

Think about what your goals are as an investor and your risk tolerance based on how much you’re willing to lose per month 🤔

🟢 If you identify as a conservative investor, you might want to invest most or ALL of your portfolio in low-risk stocks and ETFs, like VOO.

🟡 As a moderate investor, you might invest half of your portfolio in low-risk stocks and ETFs, and the other half in riskier individual stocks.

🔴 As an aggressive investor, you might invest MOST of your portfolio in medium-to-high-risk individual stocks.