What is your risk tolerance

Risk Tolerance Revisited

Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

By John Corron, Wealth Advisor –

Sound financial planning involves constantly checking with clients on changes to their financial circumstances. Are there new major expenses on the horizon? Is income significantly higher than last year? Have any unexpected health issues popped up in your family that stretched the budget?

These are important influences on financial plans. The recent market environment and world events with COVID-19 have brought another important question back to the fore: Is it time to revisit your risk tolerance?

One Size Does Not Fit All

It is common practice to gradually reduce risk in investments over time as savings grow and goal-funding progress is made. For younger savers and investors, the power of compounding is a major benefit and it’s a common philosophy that savers can afford to take on more risk and withstand more volatility early on in life.

In reality, this view is client-specific as individuals vary greatly in their comfort with taking risk. Some younger savers are quite risk-averse. Some older savers are more risk-seeking. The question now, as we have experienced such an unprecedented period of market volatility, is: Should investors re-think their overall risk tolerance preferences?

Finding the Balance

As financial planners we spend a lot of time and energy getting to know clients, projecting the good and bad that may unfold for them in the future and narrowing down the amount of risk they need to take to meet their goals.

At the same time, we try not to stress clients out by suggesting they assume more risk in their portfolios than they are comfortable with. While current risk profiles may have been built on relatively tame historical market volatility assumptions, it may be prudent to revisit investment growth projections to estimate the impact of more frequent stress and volatility in market returns.

Maybe You’re Good, but if You’re Not

It may very well be that your financial plan is built to withstand increased volatility and uncertainty. But if projections indicate it’s time to revisit your risk tolerance, knowing sooner rather than later and making adjustments will be a valuable benefit to your planning moving forward.

It could be that after experiencing this latest cycle of volatile markets, your risk tolerance preferences may have changed. Reach out to your planner to see if you’re still on track to meet your goals and adjust accordingly if not.

Share:
facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.
Share Post: facebook Created with Sketch. twitter Created with Sketch. linkedin Created with Sketch. mail Created with Sketch. print Created with Sketch.

RECENT POSTS

Charitable Giving Strategies in a High-Income Year

Tom Fridrich, JD, CLUⓇ, ChFCⓇ, Senior Wealth Planner  The end of the year offers an ideal opportunity to look both forward and back — reflecting on recent achievements, while setting goals for the upcoming months. For many of my clients, it’s also a time to review their finances and i …

Let’s Talk About Midterm Elections and Your Investments

This week was midterm elections and we’ve had many questions about what it all could mean, which we’ll tackle in today’s blog. We consider it a great honor to vote, and while we may not know the final results of the election for days (or even months), what we do know is the election will …

3 Nontraditional Ways to Give That Still Qualify for a Tax Deduction

Kevin Oleszewski, Senior Wealth Planner ‘Tis the season to give. In fact, 37% of charitable giving occurs during the last quarter of the year — 20% of it in December alone, according to a survey conducted by the Blackbaud Institute. And while the holidays are traditionally a time to reflect …

Compounding: The Good and the Bad

John Corron, CFP® – Wealth Advisor – Some pieces of wisdom are so simple that many people may assume that everyone in their own world already knows it. Sleep is vital to all aspects of health. Trust is vital to all relationships. And driving in a snowstorm is a bad idea (unless …

1 2 3 93 94 95
What is your risk tolerance

Get in Touch

In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.

Schedule a Consultation

TweetsFollow Us