As I’ve gotten older, my risk tolerance has steadily declined. This is why I’ve only got ~30% of my net worth allocated to the public markets. When you accumulate enough wealth, you no longer want to have as much exposure to assets that are intangible, risky, and hard to control. There’s just too much at stake.
For example, let’s say you’ve got a respectable $200,000 invested in the market. If your portfolio loses 30% of its value, you can still make up the $60,000 loss through contributions from your various income sources. It may take a while, but based on current median income levels, $60,000 is not an insurmountable loss.
If you lose 30% on a $2 million portfolio, making up $600,000 is a grind! If the $2 million was derived mostly from middle class wages you earned over the decades, you’ve pretty much screwed yourself out of ever living off a $2 million portfolio if you planned to retire then. You might be dead long before you ever get back to even.