Join Tim Regan and Katie Umland as they discuss the relationship between risk and retirement when building investment portfolios for retirement. Learn what “risk” really is, how it factors into a two-comma life, and how you can find your personal risk number today.
Building a nest egg for retirement is a marathon, not a sprint – and understanding your risk tolerance is crucial for navigating the long road. But what exactly is “risk?”
“The way I like to think about risk really is: What’s the likelihood that I’m not going to get the outcome that I’m looking for?” Tim explains.
While you can’t eliminate all risk, you can understand your personal “risk tolerance” to find investments that fit your specific needs and goals and balance out potential losses and gains.
Tim and Katie compare risk tolerance to a personal speed limit – too slow, and you’re not getting where you want to go; too fast, and you’re putting yourself at unnecessary risk. The key to proper risk management is to explore your own risk tolerance and make a plan based on those factors.
At PrairieView, clients learn their unique risk tolerance through a combination of advanced Nitrogen software and one-on-one conversations with experienced financial professionals – combining real data with the human element only advisors can provide.
The best part? You can take advantage of that risk tolerance questionnaire completely free and from the comfort of your home – it’s available right on the PrairieView website.
“It’s not just ‘how much do I have in stocks and bonds,’ but it’s also ‘what’s my tax treatment and how do I diversify from a tax perspective?’” explains Tim. “Because if you think about all of those different risks, there’s the risk of losing money, the risk of running out of money, the risk of not getting the desired result – but there’s also the risk of ‘I lost half of my earnings to taxes because I didn’t plan for that.’”
Tune into the full episode to learn more about how balancing risk and reward can help you achieve your two-comma life, and start building a portfolio crafted for your own specific risk levels.
Click here to explore our other “Retirement Readiness” episodes.
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Key Timestamps and Topics
- 00:00:50 – What does it mean to balance risk and reward in a portfolio?
- 00:02:36 – How PrairieView utilizes a risk assessment tool called Nitrogen to determine personal risk tolerance.
- 00:03:59 – The hosts discuss how risk tolerance may change over time and its impact on financial planning.
- 00:05:17 – What is risk management and why is it important in financial planning?
- 00:06:30 – Defining risk as the likelihood of not achieving desired outcomes in financial planning.
- 00:08:09 – The importance of aligning risk tolerance between spouses and the impact on financial decisions.
- 00:10:06 – Addressing potential changes in market yields and the need for portfolio risk assessment.
- 00:11:41 – Why diversification, including tax diversification, is key in managing risks.
- 00:15:46 – Tim and Katie encourage listeners to assess their risk scores and portfolio risk to ensure alignment with financial goals.
3 Key Takeaways
- Risk tolerance is your comfort level with the possibility of losing money in exchange for potentially higher returns. Each individual has their own risk tolerance, which should be considered when making investment decisions.
- Understanding your unique risk tolerance – and aligning it with your financial goals for retirement – is crucial for long-term financial success.
- Life events can impact your risk tolerance and overall goals, so it’s important to regularly reassess your risk profile and check in on your investments.
Links
Make a Plan for Your Future with PrairieView Wealth
Want to discover your risk tolerance? Wondering if your retirement portfolio is balanced between risk and return? Click here to connect with a member of the PrairieView Wealth team and get started today.
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