Grow your risk tolerance muscle as it will dictate how wealthy you are

Today let’s talk about Risk Tolerance muscle.

Assuming an investment with a return of 50% per annum, what would be the future financial scenario like in 5, 10, or 20 years’ time? The big picture is really exciting, right?

However, even if the annual return of 50% is achievable, but in reality many people cannot make it to the end of the journey (compound the investment as planned to achieve the 20th year result stipulated) to achieve great wealth.

You will only be able to find out the answer unless you have completed the journey and grown your risk tolerance muscle...

Let’s work out the assumptions:

To grow your $10,000 account using compounded plan to over $576,000 in 10 years, $4,378,000 in 15 years and $33,252,000 in 20 years, you need to go through the trading journey with severe tests, at different periods, of your psychological strengths in taking losses.

The following is an illustration basing on our basic money management and trading lot size with a 250 pips stop loss assumption:

1st year: USD 10,000 = 0.33 mini lot x 250 pips = USD 82.50 or SGD 107.25 / losing trade
10th year: USD 576,000 = 19.2 mini lots x 250 pips = USD 4,800 or SGD 6,240 / losing trade
15th year: USD 4,378,000 = 146 mini lots x 250 pips =USD $36,500 or SGD 47,450 / losing trade
20th year: USD 33,252,000 = 110.84 standard lots x 250 pips = USD 277,100 or SGD 295,230 / losing trade

Are you still comfortable taking the big trading losses when your lot size grows with your increased capital?

Different people have different risk tolerance levels. Your level dictates how much wealth you are going to accumulate, as risk tolerance level will increase commensurate with your experience and confidence with the system.

My advice: Grow your risk tolerance muscle by going through the journey with passion, commitment, determination, discipline and patience, the rest will come into place and your life will be very rewarding, enriching and fulfilling. But don’t forget to do charity with your great wealth god bestowed on you!