Playing the percentage game to assess your risk appetite

26th September 2025, Dublin:

Financial planning experts stress the importance of starting with a solid foundation, which includes building an emergency fund that covers three to six months of essential expenses. Only once that safety net is in place should you start thinking about investing.

It’s also important to match your investment strategy to your goals and time horizon. For short-term goals (less than five years), safer options like bank deposits or state savings may be more appropriate. For long-term goals (five to ten years or more), you may be able to take on more risk by investing in assets like equities or property, which tend to offer higher potential returns and better protection against inflation.

Understanding your own risk tolerance is crucial. This includes knowing your full financial picture, how dependent you are on the investment, and how you would emotionally respond to market losses. Many banks and advisers offer tools—such as risk appetite questionnaires—to help you find a strategy that fits your comfort level. If seeing your portfolio drop by 10% would cause sleepless nights, a more conservative approach may be better suited to you.

At the same time, it’s important to recognise that investment returns are not always smooth or predictable. Volatility is part of the journey, and those who remain calm during downturns are more likely to benefit in the long run.

Karl Rogers, Chief Investment Officer at Elkstone, highlights this point in his recent article with The Irish Times by referencing Roger Federer’s commencement speech to Dartmouth College in 2024. Federer noted that even though he won almost 80% of his matches, he only won 54% of the individual points. The message is clear: you don’t have to win every point to win the game. In investing, just like in tennis, you need to accept that not every moment will go your way.

Karl Rogers warns that reacting emotionally to every dip in the stock market—especially in today’s world where updates are constantly at our fingertips—can lead to poor decisions. These knee-jerk reactions, which he calls "double faults," can damage your long-term outcomes. Instead, staying focused on your goals and maintaining a long-term perspective is the better strategy.

In short, investing successfully is about balance—between risk and reward, between emotional reaction and rational planning, and between short-term caution and long-term growth.

Read the full article from Elkstone's Chief Investment Officer, Karl Rogers on The Irish Times