Fear freezes people. It works for fawns. Not so well for opossums, at least since we showed up. Fear is tied to risk and risk can’t be avoided. Risk is also personal. Understanding my risk tolerance is why my bio is so long and varied. Years ago I realized that in many things I am a chicken adventurer. My adventurous friends think I am a chicken. My cautious friends think I am adventurous. Knowing where to draw that line is immensely enabling, whether that is in the natural wilderness or the artificial one we’ve invented called investing.

Friday night I got to do one of my favorite things to do in public that doesn’t involve dancing. I gave a talk. (Thank you Friends of Langley Library.) Yeah, I’m easily entertained and one way to entertain me is to let me entertain others. I enjoy the very thing so many people are afraid of, public speaking. The talk was the first in a three-art series. March, bicycling across America. April, walking across Scotland. May, year-round hiking and skiing in the Cascade Mountains. A persistent theme for questions centers on fear. Wasn’t I worried about getting hurt? Of course. But I’ve learned when to continue and when to turn back.

On Saturday I got to provide one my favorite services from my business, consulting about life and money. Personal finance has never been simple. The recent turmoil has shaken peoples’ confidence in the system, which makes them even more likely to worry and doubt. Read my previous posts and you know I can sympathize.  Yet, more people are finding the courage to find their own answers. I’m impressed. Rather than work with their fears, I try to find their comfort zones, and then maybe expand those borders, and sometimes even shrink them based on their risk tolerance.

The risk tolerance of a chicken adventurer like me is a tested tolerance. I like to hike on cross-country skis. No lycra required. When I find an open slope of fresh snow I pause and check the situation. What was the avalanche report? Do I see any evidence of a slide? If it looks safe, but then I hear the snow settle under me, I prudently turn around, thank the world for a fine view and head back to safety. When I bicycled across America I reduced my risk by simply shifting when I rode. In the morning people are on their way to work and don’t want to be late. After work they may have had a bad day, may not be in a rush to get home, may have had a few drinks, or may just be fatigued. So, I rode early and stopped early.

My risk tolerance with stocks has been tested, massively. Losing almost everything, not being able to pay the mortgage for over a year, and witnessing my triple whammy would be enough to convince many people to never invest again. Yet, I continue to invest.

The avalanche slope was a risk. But the rest of the trip was worthwhile even without that last bit. Investing is a risk, and I’ve felt the pain; but, I’ve also had enough worthwhile experiences to encourage me to continue.

But that is me.

Everyone has to find their boundaries and their limits. It is not an academic effort. It is not just a thought experiment. A bit of testing teaching more than a lot of thinking.

But, after those boundaries are better understood, then it is time to turn back to the zone they border. There’s where the positive parts live. It is easy to fall into the trap of trying to optimize every endeavor; especially when that endeavor is retirement planning conducted close to retirement. Maximize everything! No.

I see many people trying to prop up the edgy investments. There’s a value in that as long as it doesn’t cost too much, and I’m including the emotional cost. For good listeners it is relatively easy to hear the person’s tone change as they describe what they’re considering and doing. (It is why even consultants need consultants.) Staying in a job a few more years can sound like fun, or boring and dull and doable, or a grind emotionally and financially. A house can be a home and a joy, or an acceptable shelter, or an onerous burden. Investing in stocks can be exciting, or dry but useful, or scary. Asking about each of those, and other, topics can sketch a border. How risky is it to stay in the job, the house, or the stocks?

My home, which is a joy – and is also for sale

If there is some combination that works, great. If not, then it is time to get creative; which can be a lot of fun.

How about partial employment, or one and a half jobs, or self-employment, or even taking a sabbatical? How about selling, or renting, or getting a roommate, or swapping for a while? How about diving into individual stocks, or maybe mutual funds, or maybe bonds, or maybe some of the sharing economy possibilities like peer-to-peer lending?

The more frugal the person, the more options they have. How else do you think I’ve managed to maintain some semblance of normalcy? My favorite scenario was from a very frugal person who had a moderate windfall, that was large but not large enough. We realized that ten percent of that windfall and a frugal lifestyle could buy a year-long sabbatical and a lot of time to find creative and highly personal solutions. Meanwhile, the other 90% would be invested and possibly allowing the sabbatical to extend.

My home looks out across Cultus Bay, a tide flat with a view. I purposely bought above the historic tsunami line and back from the steeper hillsides. Between me and the mountains is Scatchet Head, a community with some of the most beautiful views. Yet, I look at the houses built on the water and below the hillside and know that I don’t want to live in such a risky place. But for them, it may be perfectly fine and never a problem. It is good that we both know our risk tolerances.

Scatchet Sunset – from Twelve Months at Cultus Bay