Most investors overestimate their tolerance for loss — until they see it in pounds rather than percentages.
Risk questionnaires ask how you would feel about a 20% fall. Almost everyone says they would hold. Rewrite the question as "how would you feel about losing £84,000" and the answers change immediately.
Capacity is not the same as tolerance
Tolerance is emotional: how much volatility you can watch without acting. Capacity is arithmetic: how much loss your plan can absorb and still deliver. A plan must respect the lower of the two.
Time horizon does most of the work
Money needed in three years and money needed in thirty are not the same money, and should not sit in the same portfolio.
Write down the plan while you are calm
The purpose of a written strategy is to be read on the worst day, not the best one.
