Today’s Prep:
How much risk should you have in your portfolio? How do you know how much risk you actually have? Today we’ll talk about managing the risk in your investments.
Equipping Points:
Most people try to mitigate risk as much as possible in their lives. From wearing a seatbelt to double checking that the garage door is closed, that’s mitigating risk. When it comes to our money, most of us also want to minimize our financial risk.
Many will say they want to be moderate when it comes to their portfolio. But is your money actually invested in a more aggressive way than you thought? Your definition of moderate might be different than Wall Street’s definition. Everybody’s situation is different though, so it’s important to talk about your risk and your comfort level with risk with your financial advisor.
When clients come to see Eric about their risk, his team will run a risk assessment and put it in dollar figures. What risk measurements does he use? What do these numbers and figures mean in your actual retirement plan? The more money you have, the more risk you can take. But, why give it up if you don’t have to? Understanding your risk and how you’re exposed is a critical part of your retirement plan.
Sometimes you need to adjust your mindset when it comes to risk. You need some risk in order for your portfolio to grow but not so much that you lose it all. What options do you have?
Listen to the entire episode or click on the timestamps below to skip ahead.
0:47 – What does it mean when someone says they are risk-adverse?
2:31 – Why do people claim they are risk-adverse but have their money in risky places?
5:27 – How does Eric work through the risk assessment analysis with clients?
6:51 – Who was T Boone Pickens and what can we learn from his story?
8:20 – What should your risk mindset and strategy be?
Today’s Takeaway:
“Really you need to determine what kind of return you need to make to make your plan work and then work it backwards from there. That’s an easier way to approach it rather than matching something up to your retirement date.“
-Eric Peterson
Related Resources:
Financial Planning and Gun Safety
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