What must an investor consider regarding their portfolio size when assessing risk?

An investor needs to consider their portfolio size when assessing risk because it significantly affects their investment choices. A larger portfolio may allow for greater diversification, enabling the investor to spread their risk across various asset classes and sectors. This diversification can reduce the overall volatility of the portfolio and mitigate the impact of poor performance in any single investment.

Conversely, a smaller portfolio may limit an investor's ability to diversify, potentially increasing their exposure to risk. Therefore, the size of the portfolio plays a crucial role in determining the types and number of investments an investor can make, which in turn influences their overall risk profile.

While portfolio size might also relate to factors such as fees and return expectations, the primary consideration in assessing risk remains tied to the variety and distribution of investments available based on the portfolio's scale. This relationship emphasizes the importance of aligning investment strategies with the investor's risk tolerance and financial goals.