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2 investing lessons that helped a 37-year-old multimillionaire build her fortune

Kiana Danial and daughterKiana Danial

Summary List Placement

At age 37, Kiana Danial has an investment portfolio worth $2 million. She's also built a career around teaching other women how to invest through her company, Invest Diva. But she didn't always know what she was doing.

When it came to her personal finances, she had a rude awakening in 2011, after losing her job as a public relations associate. Danial suddenly found herself unable to cover her bills. She thought about dipping into an investment fund that she had been contributing to through an advisor. But she quickly learned it wasn't accessible without a large penalty.

Her frustration kicked in and she realized it was time for her to get smart about managing her money so that she would never again be in the same situation. She began investing in the stock market on her own, but she says the journey wasn't easy — and she learned a lot about market volatility and risk along the way.

Below, she shares two key lessons she learned about risk and how to manage it when it comes to making investment decisions. 

1. She learned about risk management the hard way

When she first started investing, she was mainly trading international currencies on the foreign exchange market (Forex) because that was the field she worked in. She made some money in forex, but she also lost a good amount.

"Forex trading is very risky," Danial told Insider. "It wasn't until I read the book 'The Fundamentals of Financial Planning' that I realized, 'Oh my gosh, I shouldn't even be forex trading.' My risk tolerance is way too low for something like that. And that's where I started learning about the stock market and index fund trading and investing." 

She realized she needed to put a lot more thought into how much she was investing and which assets she was buying. Previously, she was just following market noise without having a plan. 

"I started trading and investing before I read this book and I ended up blowing up my account. I ended up just trading based on the FOMO and hype that I was hearing in the news" and at her job on the New York Stock Exchange, Danial told Insider.

  2. She learned her risk tolerance and risk capacity 

Knowing her limits became critical to Danial. Now, she always considers her risk tolerance, which is a measure of how much risk she can take on emotionally, and her risk capacity, which is how much risk she can take on financially.

Danial said she learned that risk tolerance and capacity can change based on circumstances. Now, she makes more money and has multiple streams of income than when she first started investing. This means her risk capacity has increased. However, since she had a daughter, her priorities have shifted to building generational wealth. This means even though her capacity is higher, her risk tolerance may be lower. 

How to figure out your own risk tolerance

Understanding your risk tolerance can be determined with a fairly simple exercise. Think about an amount of money you plan to invest; if it's $10,000, consider how you'd feel if it turned into $20,000. Then, consider how you'd feel if that same amount turned into $2,000. If that's too much uncertainty for you, then you should probably stay away from high-risk investment strategies. 

If you think you may need more guidance, robo-advisors can be a smart wat to build an investment portfolio catered to your needs and risk tolerance. There are various apps that you can pick from depending on your specific goals. A Platform like Betterment is great if you think you'll need access to human financial advisors, while an app like Ally is a great option for beginners. And if saving for retirement is what you're after, then Fidelity might be a better pick.

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