Personal Risk Tolerance has Changed since 2008

In the last three weeks, there have been three potential new clients who had one very striking thing in common. They each had over $1,000,000 — individually representing a third to half of their entire net worth — in cash! They each have maintained some equity exposure in their portfolios, but the “shock and awe” of losses sustained in 2008 still looms large in their psyche.

So, was it just a coincidence that three people sitting on a pile of cash, each a different age and professional background, would be seeking out new professional advice at roughly the same time? Or, is their situation typical of investors regardless of age, background or size of portfolio?

Like many investors worldwide, their personal risk tolerance was recalibrated in 2008, resulting in a fear- induced stockpiling of cash. They each expressed the same sentiment: for a while having so much cash helped me sleep at night, but now I am losing sleep over the fact that it earns me nothing while inflation erodes its buying power daily.


This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.