Core Viewpoint - The article discusses the importance of understanding risk tolerance and risk profile in investment decisions, especially in the context of changing market conditions and personal investment goals [5][27]. Summary by Sections Risk Tolerance - Risk tolerance is defined as the level of risk an individual can psychologically and emotionally accept, particularly in terms of account declines and short-term losses [9][10]. - FinaMetrica's research indicates that risk tolerance is a relatively stable personality trait, not significantly affected by market conditions, as evidenced by consistent scores from 2008 to 2020 despite various market crises [10][11]. Risk Profile - The concept of risk profile is introduced as a comprehensive assessment of how much risk an individual is willing and able to take based on specific investment goals [13]. - Risk profiles are influenced by three main factors: investment goals (e.g., buying a house, retirement), the realistic conditions needed to achieve these goals (e.g., financial status, cash flow), and individual personality traits (e.g., risk tolerance, emotional resilience) [15]. Determining Risk Profile - To determine an appropriate risk profile, investors should balance goal-driven factors (e.g., required returns, timelines) with personality-driven factors (e.g., risk tolerance) [18][20]. - This involves clarifying personal identity and investment objectives, allowing for informed decision-making regarding risk [21]. Addressing Inconsistencies - The article addresses scenarios where an individual's risk tolerance and the required risk for current investment situations do not align, emphasizing the need for tailored strategies for different financial goals [24]. - It suggests managing multiple goals through separate accounts or a unified risk preference, while cautioning against high-risk investments for short-term objectives [26]. Conclusion - The article concludes that understanding personal risk and maintaining a suitable investment strategy is crucial for navigating market fluctuations, advocating for a focus on long-term goals rather than short-term market movements [28][30].