Money can be seen as a good thing or as a bad thing. We idolize the great amounts of wealth created by startup entrepreneurs but at the same time look at money as the root of evil that drives bad-boy billionaires.

There are many stories that we inherit or tell ourselves about money and these stories are very much tied to our childhood experiences, the environment we grew up in and the time we were born.

Investors who are senior citizens today majorly believe in investing in property because that was probably the only investment avenue available to them in their prime earning years. Younger investors today in contrast would have serious questions about the value of buying a property given the headache of ownership, the lack of returns and the commitment to living in one place for a long time.

These stories about money have a great impact on the risk we are able or willing to take. A twenty per cent fall in the stock market has a dramatically different impact on someone who has his life savings invested compared to someone who has just invested his first paycheck.

Jeff Bezos once said that you want to look back on your life and try to minimize the number of regrets you have. This regret minimization framework is key to risk management.

Investing is all about trade-offs; you will have to take more risk if you want a higher return. Some investors will regret having missed out on investing in multibagger stocks. Others will regret seeing huge losses in their portfolio. 

The question is, which of those is harder for you to bear at the end of the day? This is where risk management gets personal, because only you know the answer to that question.