Risk tolerance is an absolutely critical and foundational part of coming up with your strategy.

When it comes to risk tolerance there are two different layers to consider:

1. What % of my net worth am I comfortable having in crypto?
2. Within crypto, how do I want to diversify my holdings between high-risk and lower-risk assets?

We’ll get to #2 later on in this guide, but for now let’s focus on #1.

To simplify I am going to create a few “risk profiles”. Most people will fall into one of them:

I can’t tell you which one you are, there are many factors to consider from your personal life and approach to life.

But one important question to ask is: what would the impact be on my life if my crypto holdings went to zero? While it’s unlikely that everything in crypto will go to literal 0, it’s very much not unheard of for assets to drop by 50-99%.

Once you’ve had a think about how much of your net worth you feel comfortable being in crypto, write it down, and set it aside - we’ll be breaking down this number later into allocating it within crypto.

<aside> ✍️ Action Step: Write down what % of your networth you are comfortable having in crypto.

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Next up.. ⤵️

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