Risk tolerance blends your financial capacity to take losses with your emotional willingness to endure them. Understanding both helps you build a portfolio you can stick with during volatility.

Consider your time horizon, income stability, and other resources. Longer timelines and flexible budgets often allow for a higher stock allocation, while shorter goals demand more conservative mixes.

Questionnaires can help you gauge comfort, but real behavior matters most. Review past reactions to market swings to craft a strategy that lets you sleep at night while still reaching your targets.