Your investment strategy is designed with two key factors in mind: risk capacity and risk tolerance. Risk capacity refers to your financial ability to take on risk, determined by factors such as your assets, liabilities, income, savings rate, time horizon, and financial goals. Risk tolerance, on the other hand, reflects your psychological willingness to accept risk. It is an emotional characteristic that industry standards, regulatory guidelines, and best practices emphasize should not only be discussed but also formally documented on a regular basis. Please take a moment to review and consider the following four questions. Your perspective around these questions will help guide our discussion on the often observed relationship between risk and returns, as well as the trade-offs involved in balancing your financial goals with the risks required to achieve them.