In my personal life in Colorado, even at my age, which these days starts with a 5, I’m happy to still be fairly active doing things that I love. Yet to some, these things might look dangerous.
For example, I surf the ocean whenever I can get there. Of course, the ocean has marine life, rip currents, and other surfers with sharp fins on the bottom of their boards. I know plenty of folks who would never step one foot in the ocean, let alone try to ride a fiberglass thingy.
I’m never really afraid, other than a little anxious that I’m in someone’s way. I’ve learned what size waves are appropriate for me, and I’ve learned when I’m best just observing from the safety of the shore.
Yet, if you ask me what terrifies me? It’s heights. Though I rock climb (mostly indoors) and am always tethered to a rope that could likely hold up the weight of a pickup truck, I’m utterly terrified that today’s the day the rope will snap, sending me to my demise. But it’s not just rock climbing. When visiting the Hoover Dam with my son a few years back, I clung to the back of his shirt to the point of ridiculousness, and total embarrassment for him – (he was 12 after all) as he looked out, thinking that day would be the day a freak wind event would send him flying off the ledge. Peering over the edge was a total no-go for me –attempting it once buckled me.
I thought about fear (a lot) when recently visiting the Vatican in Rome with the family in February of 2026. That same death-defying (see rationale) child convinced me to climb to the top of the stairs of the dome at St. Peter’s Basilica. It took every fiber in me to get to the top while trying to convince myself that divinity itself wouldn’t stop the dome from collapsing that day. At the lookout, completely encased by a hard steel cage, I stayed 3 feet from the steel rods, fearing not about my safety, but as a clutz, I would be “that guy”, who drops his phone over the edge, with said phone landing, taking a toddler out 100 feet down. And, what if the phone was unlocked? Oh, my world would most certainly end. Sorry kid.
Yes, I’ll take sharks and fins, broken bones and broken bikes 15 miles from home over a many-times-reinforced building constructed with the help of the holy trinity himself, thank you very much.
It’s weird, right? Or, is it just being human?
Ask ten people what they consider to be risky in their personal lives, and you’ll get ten different answers.
Risk vs. Fear
Risk is one of those words that feels like it should be precise, measurable, and objective – and many facets involving our lives, it mostly is. In this algorithmic and data-obsessed world, risk measurement is used to help determine insurance costs, stress test engineering and designs, to the point of having a good idea when something, or someone, could fail, like a church dome. Many fear flying for 2 hours, opting instead to drive 20 hours, even though the statistics overwhelmingly show flying is safer than driving.
But too often, when we think about risk, it ends up being more emotional, vague, and deeply personal. See, Brian, walking to the top of said church dome, imagining your flight going down. When it comes to money, some will say risk means losing money or seeing portfolios go down in value. Others will say market volatility yo-yoing keeps them up at night. Still others will say uncertainty, fearful of what may be around the corner.
It goes on. There are plenty of folks out there who might. say their biggest risk is regret, having not lived doing what they wanted, or missing out on opportunities. They then attach money as the solution (need more of it), or the problem (the lack thereof of money?). And honestly? None of those answers is wrong.
But most of them are incomplete.
Why Risk Feels So Uncomfortable
That’s because risk isn’t just about outcomes. It’s about expectations, time horizons, emotional tolerance, past experiences, and how uncertainty feels in your body — not just your portfolio. Which is why conversations about risk are often less about math and more about psychology.
From a purely biological standpoint, humans are wired to avoid loss more strongly than they seek gain. Behavioral economists call this “loss aversion,” but you don’t need a fancy term to recognize it. Losing $100 feels worse than gaining $100 feels good — even though the dollar amounts are identical.
Add uncertainty into the mix, and the discomfort intensifies. Our brains dislike not knowing what’s coming. They prefer bad certainty to an ambiguous possibility. A guaranteed bad outcome often feels easier to tolerate than a possible bad outcome — even when the odds strongly favor a positive one.
This is why risk often feels intolerable in the moment and manageable in hindsight. It’s also why many financial mistakes happen, not because someone lacked information, but because emotions overwhelmed judgment.
I’ll bore you with another surfing story (it’s always surfing stories, I need a new hobby). When I was learning to surf many moons ago, I was in Costa Rica at a spot near a river mouth. Lore suggested there were big crocodiles in the river. Those didn’t seem to worry me. However, when I was done with my session, I noticed that no matter how much I paddled towards shore, I didn’t seem to get any closer. I kept paddling and paddling, getting more tired and anxious. It felt like I was just going in circles. Turns out I was doing just that - caught in a circular rip current caused by the river mouth. It wasn’t big, but it was “enough”.
A local surfer who was there must have seen the moderate panic in my eyes. He effortlessly paddled over to me and told me to go maybe 10 feet to my right, away from the river mouth. Within seconds was out of the rip and back on shore, not long after. My judgment was so clouded that I wasn’t able to be rational.
People die from rip currents all the time. They aren’t sucked under water via some whirlpool vortex thingy only to be dumped out to sea miles later. They are stuck in a little shape like a number 9 and
Volatility Is Not the Same Thing as Risk – It’s Noise
One of the most common misunderstandings in investing is equating volatility with risk.
Volatility simply means prices move. Sometimes up. Sometimes down. Sometimes sharply. Sometimes quietly. It is the visible surface motion of markets, the turbulence and noise that comes with hundreds of millions of humans (and probably millions more trading bots) globally interacting.
It’s the noise within the markets that tends to glue us to the financial news. I know plenty of folks, and I dare say a number of clients, who likely pay little attention to the markets and their portfolios when things are boring; even less so when things are moving steadily up. But, as soon as noise is amplified, maybe we slip a peek “just to see how bad it is”. Then fear kicks in.
But that noise is what is often necessary and appropriate for long-term objectives. A portfolio that feels stable and free of the noise in the short term can quietly erode purchasing power over time. Comfort and safety are not always aligned — and discomfort and danger are not always linked.
That disconnect is one of the hardest parts of investing to internalize.
The Real Risk Most People Face
Most people assume financial risk means losing money in markets.
But for long-term households, the bigger risks often come from:
- Outliving assets
- Inflation eroding purchasing power
- Under-saving
- Emotional decision-making during stress
- Staying too conservative for too long
- Reacting to fear instead of structure
Ironically, avoiding market volatility entirely can increase long-term financial risk — even though it feels safer in the moment.
This doesn’t mean volatility should be ignored. It means it should be contextualized.
Risk Is A Tradeoff
A common goal in financial planning conversations is “reducing risk.” And while that sounds reasonable, it’s often incomplete. It’s because risk cannot be eliminated — only transformed. For example, the inflation spike of 2021 into 2023, consumers were suddenly dealing with a loss of purchasing power and less left over each month because prices for goods went up quickly. That bank account earning 0% likely didn’t tick much higher.
A dollar in 2020 was worth 97 cents in 2021, and under 90 cents in 2022. It still felt like a dollar, but it wasn’t. Still, an investment worth 90 cents on the dollar felt so much worse, generating negative buzz.
Every financial decision involves tradeoffs, whether we acknowledge them or not. The goal is
to align risk with purpose, timeline, and emotional tolerance — so that uncertainty becomes manageable rather than destabilizing.
Why Fear Is a Terrible Financial Advisor
Fear is not inherently bad. It evolved to protect us. But it’s optimized for immediate threats, not long-term probabilities.
Fear says: “Get out now.” “Protect what’s left.” “All signs point to this being the top, worse than the Great Depression, etc.” “Don’t let this get worse.” “Do something.”
Fear is excellent at responding to predators. It’s in our genetic structure to have that flight element, which was great when we were mostly hunter-gatherers and were at risk of getting eaten by a bear. But in today’s world, it’s terrible at navigating compounding.
Markets rarely behave like predators. They behave like weather systems — unpredictable in the short term, directional over long periods. Reacting to every storm often leads to exhaustion without improving outcomes.
Fear-driven decisions tend to cluster at exactly the wrong moments: selling after declines, abandoning strategies mid-cycle, shifting risk when discomfort peaks rather than when probabilities change.
What Healthy Risk Management Actually Looks Like
Healthy risk management isn’t about avoiding discomfort. It’s about building systems that allow you to tolerate discomfort without derailing long-term outcomes.
That usually means:
- Diversification, even when it seems boring
- Time horizon alignment, even when your mind stresses over the short term
- Liquidity planning to make sure you have the ready cash when you need it
- Rebalancing discipline to keep your portfolio aligned when it hurts to do so
- Emotional awareness to know when you are freaking out or drinking the coolaid a bit too much.
- Realistic expectations to know that you likely won’t triple your money in a year, and why that is totally ok.
It means designing financial structures that don’t require perfect predictions — just reasonable behavior.
It also means recognizing that discomfort is not evidence of danger. Sometimes, it’s evidence that markets are functioning exactly as designed.
Risk Tolerance Isn’t Static
One of the biggest misconceptions in financial planning is that risk tolerance is a fixed personality trait — something you discover once and then permanently apply.
In reality, risk tolerance is dynamic. It changes with age, life stage, financial stability, experience, confidence, trauma, market environments, and personal circumstances.
Someone may tolerate volatility comfortably at one stage of life and find it intolerable at another. That doesn’t mean they’re inconsistent — it means they’re human.
Good planning doesn’t ignore this. It adapts.
The Role of Perspective
Every market chart looks terrifying when zoomed in and boring when zoomed out.
Corrections feel dramatic while they’re happening and trivial in hindsight. Volatility feels permanent in the moment and temporary later. Fear feels urgent today and irrelevant tomorrow.
That doesn’t invalidate the emotional experience — but it does contextualize it.
Risk feels largest when we focus on short-term outcomes. It becomes manageable when we reconnect with long-term objectives.
The Bigger Picture
Risk isn’t the enemy.
Unmanaged behavior is.
Markets will fluctuate. Uncertainty will exist. Volatility will continue. None of that is optional.
But how we respond — emotionally, behaviorally, structurally — determines outcomes far more than market movements themselves.
Risk is not something to fear.
It’s something to understand.
And when risk is understood — contextualized within time horizons, goals, and realistic expectations — it becomes something that can be lived with, navigated thoughtfully, and managed productively.
Fear shrinks. We become more familiar with rip currents, heights and yes, even domes at the Vatican.
Clarity grows, and decisions become easier — not because the future becomes predictable, but because your process becomes reliable.