Understanding and remaining within your risk tolerance is one of the most important factors in investing. If someone invests outside their comfort zone, they might experience anxiety or regret—or even financial loss.
However, a market run or swing may sometimes tempt an investor to change their habits.
Raising risk
Consider someone saving for retirement who takes a balanced approach to investing. They see the stock market in a bull run and wonder whether to allocate more of their contributions to equities to capitalize on the opportunity. But what if the market suffers a correction? Then this moderate-risk investor, now with a more aggressive portfolio, might panic and question their decision.
A bull run can also tempt an investor when a shortening time horizon calls for a low-risk approach. For example, a parent has significant equity investments in a Registered Education Savings Plan (RESP), and their child has started secondary school. It’s time to focus on conservative investments, but the parent doesn’t want to miss out on the booming market. However, overinvesting in equities carries risk. If the market plummets at the worst possible time, the RESP could lose value when it’s time to withdraw funds for education costs.
When too safe is a risk
Any investor’s comfort zone can be tested when stock markets experience a sharp or extended downturn, and their portfolio value drops. Some long-term investors may be tempted to sell equity investments in case markets decline further or to direct future contributions toward lower-risk investments. But playing it too safe can be a risk in itself, as you may miss out on a market recovery and fall short of your investment objective.
Let us know if you experience undue anxiety during a market downturn so we can help you stay within your comfort zone.
This article is excerpted from the Well‑Advised Fall 2026 Newsletter and published on behalf of your financial advisor for clients residing in jurisdictions where they are registered. This material is provided solely for informational and educational purposes and is not to be construed as an offer or solicitation for the sale or purchase of any securities or as providing individual investment, tax or legal advice. Consult your professional advisor(s) prior to acting on the basis of this material. Insurance products are available through advisors registered with applicable insurance regulators. In considering any particular investment, please remember that past performance is no guarantee of future performance. Although this material has been compiled from sources believed to be reliable, we cannot guarantee its accuracy or completeness. All opinions expressed and data provided herein are subject to change without notice. Neither CI Assante Wealth Management Ltd. their affiliates or their respective officers, directors, employees or advisors are responsible in any way for any damages or losses of any kind whatsoever in respect of the use of this material. CI Assante Wealth Management is a registered business name of Assante Wealth Management (Canada) Ltd. CI Assante Wealth Management Ltd is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.
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