Risk Tolerance – A Tale of
Two Friends
Rahul and Sameer had been best friends
since their school days. From climbing mango trees to playing cricket in the
narrow lanes of their neighbourhood, they had shared everything — dreams,
doubts, and endless cups of chai during college days.
After graduation, their paths
diverged. Rahul chose the steady path of a government job. He cleared the civil
services exam and soon settled into a predictable rhythm: fixed salary, pension
benefits, and the comfort of job security. Sameer, on the other hand, had
always dreamt of building something of his own. He declined a campus placement
offer and started a digital marketing firm with a college friend.
Though their careers went in very
different directions, their friendship remained strong. Over the years, they
often caught up over dinner, sharing stories of life, work, and finances. It
was during one such evening that their conversation turned towards investments
and wealth building — a topic that revealed just how differently they saw the
world.
1. Comfort with
Uncertainty
Rahul admitted that he preferred fixed deposits and public provident funds. “I
just sleep better knowing my money isn’t going anywhere,” he said. Sameer
chuckled, “I get restless if my money isn’t doing something aggressive.”
While Rahul found comfort in certainty, Sameer thrived in uncertainty. This
difference in temperament highlighted their risk tolerance — not just in
finance, but in life choices.
2. Career Choices Reflect
Risk Appetite
Their career choices mirrored their financial attitudes. Rahul’s career was
structured, secure, and guided by systems. Sameer’s entrepreneurial path was
unpredictable, filled with highs and lows. But for Sameer, the possibility of
exponential growth outweighed the comfort of a monthly pay cheque. For Rahul,
the reverse was true — and both choices were valid.
3. Reaction to Market
Volatility
In 2020, when the markets crashed suddenly, Sameer saw it as an opportunity and
doubled down on equity investments. Rahul, in contrast, felt uneasy and moved
some of his mutual funds into debt instruments. Neither was wrong — they were
simply reacting in ways consistent with their individual risk tolerance.
4. Long-Term Goals and
Flexibility
Sameer was aiming for early financial independence and was willing to take
short-term risks to get there. Rahul was more focused on stability, with
retirement in his late 50s and a strong pension plan. Their goals shaped their
choices. Knowing their own risk tolerance helped both of them stay the course,
without being swayed by trends or peer pressure.
Their story reminds us that risk
tolerance isn’t about being bold or cautious — it’s about being authentic to
oneself. Financial advisors can offer charts and plans, but ultimately, the
decisions must match one’s temperament, life goals, and comfort levels.
To sum up, there are many other
factors that influence risk tolerance — age, family responsibilities, income
stability, and past experiences, to name a few. But if there’s one lesson in
Rahul and Sameer’s journey, it’s this: Understanding your own risk tolerance
isn’t a luxury — it’s the foundation of confident, stress-free financial
decision-making.
The content made available in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation.
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