Managing Your Risk Aversion

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.

(Click the featured times below to jump forward in the episode)

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

Financial Planning Lessons From Winston Churchill

Are You Flirting with Financial Disaster?

More From Eric:

The host: Eric Peterson - Contact - Call: (515) 226-1500

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

What Does Mark Twain Have to Say About Your Financial Plan?

January 21, 2021

What financial wisdom can we glean from the sayings of Mark Twain? Believe it or not, many of these quotes are quite relevant today.

Read More

New Year, New Ideas to Consider

January 14, 2021

We all like the idea of a fresh start in the new year. What changes are already underway? Or, what changes might be unwelcomed when it comes to your retirement plan?

Read More

Mailbag: Should I Use My Severance Package to Pay Off the House?

January 7, 2021

Whether you want to learn more about using your HSA or trying to make strategic use of your severance package, Eric answers three questions from the mailbag. Do any of these questions relate to your situation?

Read More

Things Your Advisor Should Be Doing

December 30, 2020

What kind of decisions are you making alongside your financial advisor? How do you know if they are doing everything you need when it comes to creating and implementing a retirement plan? Eric talks through what you deserve from a financial advisor and how his team works with clients to meet their needs.

Read More

The Three Worlds of Money

December 23, 2020

Do you know the three worlds of money? Where does the bulk of your money live? Is your money appropriately balanced across all three worlds? We’ll break it all down on this episode.

Read More

Year-End Financial Planning Checklist

December 17, 2020

What should you do before the end of 2020 when it comes to your finances? We’ll run through a list of items on this show. 

Read More

Mailbag: How Do I Plan for Possible Long-Term Care Expenses?

December 3, 2020

When building a financial plan, it’s important to consider several different angles. Eric answers three questions from the mailbag on this week’s episode.

Read More

The Retirement Hierarchy of Needs

November 24, 2020

We compare Maslow’s hierarchy of needs to your retirement needs in this week’s podcast. Do you have all of these tiers of needs covered in your retirement plan?

Read More

Financial Planning and Gun Safety

November 19, 2020

What safety measures do you use when you own a gun? Are you implementing similar tactics with your financial plan?

Read More

Mailbag: Do I Really Need All of These Life Insurance Policies?

November 12, 2020

Do you need as much life insurance as you have? Or should you factor in eventual inheritance money when deciding when to retire? Eric answers three questions from the mailbag in this week’s podcast.

Read More

Leave a Comment