Determining ability to take risk

I would like some help in determining that ability of a private investor to take risks . The situatuion is not always clear cut and it is difficult to make an assesssment given the information. What are some of the guides to use to arrive at the correct decision? Thanks

  1. Size of portfolio relative to funds needed. That’s really about it…there’s some other shit like desire to leave bequest, yada yada, life insurance, etc., but everything relates to the main point I typed.

I look for some combination of: low to no liquidity needs, income is stable, and covers current expenses long time horizon = high ability to take risk

cfahead, I always have troubles with this topic. The following thread may help:,1135483,1135663#msg-1135663 In addition, I found that a portfolio with a size of $10 million or more would usually have an Above Avg. ability to take risk, even if it has a high required return, high spending needs and no other income stream. It seems a high net wealth individual with $1M annual living expenses has the flexibility to cut back on spending if needed. 2006 AM exam Q1 is a good example.