Everyone is a brave investor when the market is going up. In 2021, when NEPSE crossed 3,000, it felt like nobody could lose. Then it fell, and plenty of "long-term investors" sold everything at the bottom.
Risk tolerance is what you find out about yourself when your portfolio is down 30%. It's better to think it through before that happens.
Three honest questions
When do I need this money? If it's for something two years away, you simply don't have time to wait out a long slump. That's not a personality question; it's a calendar question.
Could my family handle the loss? A single person with a stable job and no dependants can take more risk than someone supporting parents and kids on one income with a home loan.
What would I actually do? Picture opening Mero Share and seeing Rs 5 lakh turned into Rs 3.2 lakh. Would you hold, buy more, or sell in a panic? Be honest, not heroic.
Risk isn't just price going down
There's also:
- Liquidity risk: you want to sell, but there are hardly any buyers.
- Credit risk: the company or institution you lent to can't pay you back.
- Inflation risk: your "safe" money quietly loses value.
- Concentration risk: too much in one place.
"Low risk" doesn't mean "no risk." Ask what could go wrong with any product someone describes that way.
The aim isn't to avoid risk completely; that's impossible. The aim is to take only the risks you understand and can afford to live through.
General information, not personal financial advice. Rules, rates and fees change, so check with the official source before you act.
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