I dont understand EOC 3. There’s two different goals with one being philanthropy and the other being antique furniture.
For Antique furniture, the person is willing to cut that expense altogether and therefore has a high risk tolerance. This makes sense.
For Philanthropy, the person is unwilling to cut the expense altogether and that still leads to a high risk tolerance. That’s the rationale they use. To be willing or unwilling to cut expense. I would say this is low risk tolerance because they’re not willing to give it up.
I get that if you’re being charitable, you have higher risk tolerance but they’re logic is not based on that. Any idea?
Actually, what they are implying is that originally, the wife’s plan is to increase the contribution from $10k to $30k per year (eventually).
But in the discussion on risk tolerance, Cree mentioned that his wife is “willing to maintain her $10k per year contributions and not increase that amount”, that means he has the leeway to cut contribution from $30k (original target) to just $10k. That shows the high risk tolerance that Cree has on Philanthropy.
It doesn’t have to be a case where you have to give up the whole thing to be seen as “high risk tolerance”. Taking a amount lower than what was aspired can also be taken as having “high risk tolerance”.
If the wife had insisted on $30k and Cree had no leeway on that, then the answer would be that Cree has a low risk tolerance on that goal.