If the risk that you’re willing and able to take is not enough to get you to your goals, then any use of ‘risk required’ implies taking more risk than you’re either able or willing to do. This isn't wise.The amount and time horizon of each goal should form part of a comprehensive assessment of risk capacity; an investor’s goals should already be accounted for in any good assessment of the risk the investor is able to take.A high risk required, i.e. a high reliance on growth in one’s investments to meet one’s goals, is actually a sign of low risk capacity, and should logically lead to a reduction in risk. A low risk required may indicate that you don’t need to take as much risk, but equally, it could mean you haven’t fully accounted for how your spending needs and aspirations may change.

Linking investor and investment risk requires putting the two into the same language; common approaches to doing this are not fit for purpose.There cannot be a perfect empirical way of mapping investor risk to investment risk. You cannot link the long-term risk people prefer with the short-term choices they make.We use indifference curves and an available frontier of different levels of portfolio risk to show where the combinations of long-term risk and reward that an investor is equally happy to accept meet the universe of available investment options.