Once you’ve answered the above two questions honestly, you will know how tolerant you are toward taking risks. Keep this in mind when you make any future investments. If you’re very risk-tolerant, take a step back before making any investments and think about whether you’re making the right decision.
If you were on a game show, which of the following would you take?
$1,000 in cash|
A 50% chance of winning $5,000
A 25% chance of winning $10,000
A 5% chance at winning $100,000
You have just finished saving for a once-in-a-lifetime vacation. Three weeks before you leave, you lose your job. Would you:
Cancel the vacation
Take a much more modest vacation
Go as scheduled (after all, you need the time to prepare for a job search)
Extend your vacation (it might be your last chance!)