What’s Your Risk Tolerance?
No person is exactly like another. Humans are unique, with their own outlook on life, internal voice, experiences, and needs. So why use a cookie-cutter formula for your finances? In order to create the best possible portfolio for your unique needs, you’ll need to know how much risk you’re willing to take and which ones you want to stay away from. Your risk tolerance is determined by several elements such as your goals, experience, investment time, and financial resources.
Your objectives for investing are important and sway your tolerance. If you’re looking to use the money soon, it could be beneficial to stay in a lower risk. But if you have plenty of years ahead to potentially accrue, bounce back, and fluctuate, then a higher risk may be right for you. Try listing the important uses for your investments—for retirement, a home, paying off debt, starting a business, etc. Either way, knowing why and when you want the money can give a better idea of what to invest in.
High Risk, High Gain Vs Low Risk, Moderate Gain
What’s more important to you: the highest possible return or not losing money? Ideally, both, but that often isn’t possible. Typically, you must make a choice between the two—meaning if you invest in high risk, you have the possibility of a high return, but also losing some or all the money you invested. Of course, the market sways often, so it could be a loss one month and gain the next. Lower risk investments can be safer. Depending on the type, some offer a minimum guarantee but at the price of lower returns.
Your investment experience can change the way you view investing. If you’ve had success with a certain strategy, type of investment, or company, you might be inclined to continue. A financial professional can help decide if that’s a wise choice. Consider incorporating your investing experience into your risk tolerance because it could affect the way you chose and react to investments.
Now that you have a better understanding of your risk tolerance, consider meeting with a financial professional to discuss your portfolio. There are different paths for different risk levels, and it often fluctuates with age and experience. Do you have an outdated portfolio? Maybe you’re new to investing? Perhaps you’re transitioning to retirement planning? Any instance, RGA can help! With our holistic approach, we have a team of financial professionals who are eager to potentially help you learn about your risk tolerance and get to planning your best retirement! Give us a call at 1-800-467-8152 or email firstname.lastname@example.org to schedule a complimentary consultation.