Were you a rebel back in high school, one of those kids who pulled pranks and didn’t play by the rules? Or, were you the teacher’s pet and a role model for other students? Regardless of which type of student you were back in high school, you probably didn’t realize how much your risk tolerance determined your behavior. Whether you broke the rules or followed them, you were figuring out your own personal levels of risk tolerance. You were deciding what rewards were worth taking a chance on, and what consequences were too dire to attempt. Ultimately, the risk of not understanding risk is a game you don’t want to play.
Your personal risk tolerance has probably changed over time as you had to think about more than just yourself and had more to lose. No matter who you are, at some point or another you come to learn your limits. You start to define your boundaries and gain a better understanding of how much you’re willing to risk in order to get what you want. When it comes to your retirement planning, risk can play a major role in determining whether or not you’ll achieve your financial goals.
An understanding of your risk tolerance is something both you and your financial advisor will need in order to determine the investments that are most appropriate for you and your goals. As you go through the different stages of your life, your risk tolerance may change as well. And, it’s not uncommon to have a lower risk tolerance in retirement than what it may have been during your working years. It makes sense that you might not want to lose what you have when you aren’t in a position to replace it.
If you’re not sure what your risk tolerance is or more importantly, if your current investment strategy is in-line with your risk tolerance, then maybe it’s time we talk. You can click here to request your complimentary, no obligation financial review where we’ll look at your current financial situation, discuss the goals you have for retirement, and talk about how we can create a plan to help you achieve your goals. During our meeting we’ll also take time to understand your risk tolerance and if your portfolio matches up with the amount of risk your comfortable taking. Sometimes, we discover people are taking way more risk in their current investment plan than they thought they were and are able to bring their plan in harmony with their actual risk tolerance. Learning how to get your customized financial plan is easy, and it all starts by scheduling your one-on-one financial review.
So, regardless of whether you were a rebel or role model in high school, make sure to understand what your risk tolerance is today in order to better help you plan for your “best” tomorrow.