That’s useful.
But it can also be misleading.
A questionnaire can tell you something about preferences. It cannot tell you what you can survive.
That second part is risk capacity.
What a questionnaire is good for#
A good questionnaire can:
- surface how you feel about uncertainty
- highlight contradictions (“I want high returns” + “I can’t tolerate a 10% fall”)
- create a shared language between partners/advisers
It’s a starting point.
What it can’t tell you#
It can’t reliably answer:
- how long your income could be interrupted
- how close you are to needing the money
- whether a drawdown would force you to sell
- what happens to your plan if markets fall at the wrong time
These are constraints, not feelings.
Ignoring them is how people end up “brave” on paper and fragile in reality.
The pairing you actually want: tolerance + capacity#
- Risk tolerance = emotional comfort with volatility
- Risk capacity = financial ability to absorb loss without derailing goals
The safe portfolio is usually bounded by the weaker of the two.
Trade-off: this can feel conservative. But the alternative is a portfolio you abandon under stress.
How to use the result properly#
1) Take the questionnaire result as a hypothesis. 2) Stress test it against capacity: - “If markets fell 30%, what changes in my life?” - “Would I be forced to sell?” 3) Build a portfolio you can maintain. 4) Revisit only when circumstances change.
The goal isn’t a perfect score. It’s a plan that survives reality.