Most of us invest because we have to, not because we want to. While many enjoy watching the working of capital markets, to most investing is a mean to an end, not an end itself. The selection of right risk level comes down to two questions:
• How much risk must I take? (i.e. what rate of return do i need to generate to get my goals, and what is the risk of investing that way?)
• How much risk can I take? (personal risk tolerance is as individual as pain tolerance and some people are naturally more resistant than others. Selecting too high of a risk tolerance can result in making a wrong decision when markets get extreme)
Your actual risk level should lie comfortably in-between those two thresholds.