Four years ago this month, I was writing about my feelings about becoming an empty nester.  Four years later, my daughter has graduated and is embarking on the next chapter in her life as a PhD student at Columbia in NYC.  Every one of her transitions gives me an opportunity for a mini-midlife crisis as I realize that I am aging.  More importantly, it reminds me that life is all about change and our own willingness and ability to adapt.

I have also realized that our flexibility changes with time, and for most of us, that means we become less willing to embrace change.  My daughter just thinks of all this movement as “normal”.  Head off to a new school environment, with no immediate friend group, in a new city… during a global pandemic?  Check – ready to go!  Me, I have a hard time choosing a different route for our morning walk.  I admire her attitude and ability to just plow through things even if they aren’t ideal or what she hoped for.

As I have been thinking about these things, it occurred to me that investors have the same challenge when it comes to risk.  Our willingness to take risk changes with time, and for most of us, that means we become less willing to embrace risk.  And properly so - we have less time to recover from the market’s inevitable gyrations.  But this is more than just an age thing.  I have clients in their 30’s who are terrified to invest and clients approaching retirement who I am constantly trying to rein in.

While I admire my daughter’s ability to adapt to new situations and might strive to learn from her flexibility, I don’t think that should apply to risk as well.  I shouldn’t take the same amount of risk as my daughter who has 30 more years of investing ahead of her than I do.  So, what is the “right” amount of risk?

There is a difference between the amount of risk you need to take to meet your goals and the amount of risk you are willing to take.  If those two levels are the same, great!  If not, that starts some good discussions about priorities, tradeoffs and the cost of loss (am I willing to give up a goal because the market didn’t behave?).  We may need to adjust our goals to bring things into balance.

I am proud of my daughter’s willingness to jump in; but that doesn’t mean I am envious.  I am darn comfortable with my life and relish my relatively stress-free pattern.  Flexibility and tolerance for risk are individualized characteristics that will change over time; life is change – adapt and Invest With A Plan.