What’s the Right Amount of Risk? Why the Answer Changes Over Time

One of the most common questions I hear is simple on the surface and surprisingly complex underneath:

“How much risk should I be taking?”

 

It’s a fair question and an important one. But the honest answer is that the “right” amount of risk isn’t a fixed number. It changes as your life changes, your goals evolve, and your financial circumstances shift.

Understanding that risk is dynamic, not static, is a key part of long-term financial success.

 

Risk Is About More Than Market Volatility

Many people think of risk only in terms of market ups and downs. But from a planning perspective, risk shows up in several forms:

• The risk of not reaching long-term goals

• The risk of running out of money

• The risk of making emotional decisions at the wrong time

• The risk of taking too little risk and falling behind inflation

Focusing solely on short-term volatility can cause investors to miss the bigger picture. True risk management starts with understanding what your money needs to do for you.

Risk Tolerance vs. Risk Capacity

Two concepts are especially important here:

 

Risk tolerance is emotional. It reflects how comfortable you feel when markets move unpredictably.

Risk capacity is practical. It reflects how much risk you can afford to take based on your financial resources, income stability, time horizon, and goals.

 

Early in a career, risk capacity is often higher, even if emotional tolerance is lower. Later in life, tolerance may increase while capacity decreases. Successful investing requires balancing both, not prioritizing just one.

Life Stages Change the Equation

The amount of risk that makes sense at 35 is rarely the same at 55 or 70.

As life progresses, priorities shift:

• Accumulation gives way to preservation

• Income planning becomes more important than growth alone

• Liquidity and flexibility carry more weight

• Time becomes a more limited resource

Adjusting risk over time isn’t a sign of market timing,  it’s a sign of thoughtful planning.

The Danger of Emotional Decisions

One of the greatest risks investors face isn’t the market, it’s reaction. Making changes during periods of stress or euphoria can quietly undo years of disciplined planning.

A clear financial plan helps create guardrails. It allows you to respond to market changes with intention rather than emotion, keeping short-term noise from derailing long-term progress.

Risk Should Serve the Plan, Not the Other Way Around

There is no universally “correct” portfolio. The right level of risk is the one that supports your goals, aligns with your life stage, and allows you to stay invested through inevitable market cycles.

When risk is viewed through the lens of a comprehensive plan, investing becomes less about guessing and more about staying on track.

 

 

Risk isn’t something to eliminate: it’s something to manage. And the right amount of risk today may not be the right amount tomorrow.

 

At Copper Beech Wealth, we help clients align investment strategy with real life, not headlines, so their financial plans remain resilient as circumstances evolve.