Congratulations on making it to part three of our Retirement Power-Up Challenge! I'm Sam Soland, senior writer at SoFi, and together we’ve found your freedom number, identified your savings gap, and taken action in your investment account.

Now, it’s time to lock in the mindset that will keep you moving forward. Because investing for retirement is a marathon, not a sprint. (On the Money will be back to its regular programming on Wednesday, Sept.3.)

Part 3: Perspective for the Long Term

Day-to-day market headlines can overwhelm investors, tempting them into kneejerk reactions, like selling during a drop or chasing a stock that’s surging. But investing for retirement is a long game. Decisions rooted in your personal financial goals will help insulate you from day-to-day noise and navigate market shifts with confidence.

Your objectives and time horizon – two topics we addressed in part one of this challenge – are key parts of this strategy. Another is your risk tolerance.

Every investment comes with a certain degree of risk, but some are riskier than others, and there is often a tradeoff between risk and reward. Developing an understanding of your personal risk tolerance can both help you make better-informed decisions about your money and give you peace of mind about the path you're on.

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Talk to a Certified Financial Planner® from SoFi. Members can schedule a complimentary 30-minute session and SoFi Plus members¹ have unlimited access to our CFPs.

Today’s Challenge: Find Your Risk Tolerance

Knowing your risk tolerance is like having a compass for your investing journey. It helps you avoid taking on more risk than you can stomach, while still aiming for returns that meet your goals. SoFi’s risk tolerance quiz – which should take you less than two minutes to complete – takes into account your time horizon, biggest financial priorities, and capacity for volatility to help you determine where you fall on the spectrum: aggressive, moderate, or conservative.

There are a few reasons that matters:

•  Shapes your portfolio: Your mix of stocks, bonds, and other investments should reflect how much volatility you can handle. A higher tolerance may allow you to embrace growth assets like stocks, while a lower tolerance may lead you toward the relative stability of bonds or money market funds.

•  Keeps your emotions in check: When markets swing, investors who don’t understand their own risk tolerance and how it’s reflected in their portfolio are more likely to panic-sell at the worst time. Knowing where you stand and why helps you stay calm and stick to your plan.

•  Aligns with your goals: If you need money in the near term (say, for a home down payment), your investments should reflect that through lower risk and easy accessibility. But if you’re saving for a retirement that’s decades away, you may more easily tolerate ups and downs in the market to capture long-term growth.

•  Prevents regret: Investing in ways that don’t align with your risk tolerance can leave you second-guessing yourself – either wishing you’d been more aggressive or regretting taking on too much. A thoughtful strategy will help you feel comfortable and remain consistent.

Take our 90-second quiz here.

In Short

Challenge Complete ✅

Congratulations! Over the past week, you've powered up your retirement savings journey by taking action and learning about yourself. Now you can put that knowledge to work. With a solid strategy, the right tools, and a long-term mindset, you’re ready to build a future you can look forward to.

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