RewardThe amount of investing risk you take should be directly related to your need and ability to take risk. Risk ToleranceLikewise, it’s critical not to exceed your risk tolerance. Many investing “products” (most of them insurance-based) are marketed as reducing the risk in investing. Financial theorist Dr. William Bernstein said, “There are no free volatility-reducing lunches that will inexpensively reduce your portfolio risk, and there is no risk fairy to insure the risky parts of your portfolio on the cheap. A risk that can be diversified away is, by its very definition, uncompensated risk.