Risk tolerance can be described in several ways, but it often comes down to this question: How much of a decline in the value of your investments are you comfortable accepting in exchange for higher potential returns over the longer term?

For most people, risk tolerance doesn’t change—at least not until retirement nears. However, certain factors can make some individuals become less or more tolerant to investment volatility.


Some experienced investors who have lived through multiple market cycles can find their risk tolerance changing. A conservative investor could be open to holding more equities in their portfolio, reassured that past market declines were all followed by recoveries. On the other side of the coin, a growth-oriented investor could become less tolerant to risk. When they were just starting to save, they may have tolerated a 20% decline in their portfolio value, but now it may not be so easy to accept the dollar value of a 20% drop in a large portfolio balance.


Tolerance to risk can increase or decrease following a significant change in someone’s financial situation. For example, a recently divorced individual may re-examine their portfolio after considering the costs of a divorce settlement and child support. Fulfilling their new financial responsibilities could make this person less tolerant of investment risk.


Someone’s investment time horizon—the number of years until they need to access their funds—also affects risk tolerance. When retirement approaches, an investor typically reduces their portfolio’s risk level. No one wants to risk a market collapse, jeopardizing a happily anticipated retirement date.

If your tolerance to investment risk ever changes, please talk to us. We’ll make sure your portfolio aligns with the change and you remain on track to meet your financial goals.

This material was prepared for and published on behalf of your financial advisor and is intended only for clients resident in the jurisdiction(s) where their representative is registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. Individual equities are available only through representatives of Assante Capital Management Ltd. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither CI Assante Wealth Management or its dealer subsidiaries Assante Capital Management Ltd. and Assante Financial Management Ltd., nor their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Assante Financial Management Ltd. is a member of the Mutual Fund Dealers Association of Canada and the MFDA Investor Protection Corporation (excluding Quebec). © 2022 CI Assante Wealth Management. All rights reserved.