Psychology vs. Physics
Your 'Risk Tolerance' questionnaire is lying to you.
How you feel about a 20% drop doesn't matter if your math can't sustain it. You need to stop managing for your emotions and start managing for your Physics.
The S3 distinction between Psychology and Physics:
- Risk Tolerance (Psychology): Your emotional comfort with market swings. Important for behavior, but subjective.
- Risk Capacity (Physics): The hard math of your liabilities and timelines. Non-negotiable and objective.
- The Sound Alignment: We ensure your portfolio never exceeds your Capacity, regardless of how 'brave' you feel.
Watch the full podcast episode for more details: https://youtu.be/7tpYnkjtH5Q
DISCLAIMER: This content is for educational purposes only and should not be considered personalized financial advice. Always consult with a qualified financial professional before making financial decisions.