Ep 14: What Is Your Risk Tolerance?

November 4, 2021

When you’re driving down the highway, going 10 mph over the speed limit, you’re taking on additional risk. You might get where you’re going faster but you’re also increasing your risk of getting a speeding ticket or running into something. Likewise, are you comfortable taking the speed your portfolio is traveling at? On today’s episode of the podcast, we’re talking about risk tolerance.

When it comes to risk tolerance, we can try to look ahead and see what would happen were something to go wrong with your portfolio. What’s the necessary rate of return you need to get to your goals?

As advisors, Alan and Troy walk their clients through a few different options of what their future could look like in the portfolio. What happens if you have less risk or more? They look to see what your level of success might be. Nobody likes to see their portfolio go down, especially when they are ready to retire.

For someone with a low-risk tolerance, it may be worth looking into an insurance product. But even if you do that, Alan and Troy recommend keeping some money in the market to be able to keep up with inflation. If inflation continues to go up like it is now, keeping all of your money out of the market is a recipe for disaster.

Listen to the entire episode or skip ahead using the timestamps below.

0:42 – Troy got a new job title!

2:11 – What is risk tolerance?

7:35 – How does your advisor know how to factor in their risk?

10:47 – How can you tell what someone’s risk tolerance may be?

12:48 – What’s an example of a low-risk tolerance solution?

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