Today’s Hack
The stock market has not been pretty lately, are you a risk-taker during these times or do you prefer to sit back and protect those assets? We are all testing our risk tolerance with inflation up, stocks down, and various other things impacting our wallets.
People who will come out of this strong are those that prepared according to their risk tolerance level. What we want to know is whether your risk tolerance matches what you’ll be dealing with. Everyone can handle when the market is doing well, but can you handle when it starts to go down?
Most people who aren’t working with a professional advisor during these times will have little to no idea of what their risk tolerance is and how that’s negatively impacting their portfolios. A lot of people are in just one 401(k) or IRA account and have been happy with those accounts, that’s great but not everyone has the time to recover from this market fall.
This strategy may not have been too bad for the past decade, but markets aren’t always going to go up. At some point, the market will fall in order to average out. The current market isn’t too bad but it may be the beginning of a bear market. Now is the time to prepare.
In reality, we are all taking some amount of risk when investing. Bonds which most thought was safe are down 10% this year. You have to always understand risk and how much you can handle. For us that’s learning your comfort level in the market and the maximum drawdown you can withstand over a certain period of time.
[0:25] – The current stock market
[2:20] – Increasing inflation and retirement
[3:56] – Do most people know their risk tolerance level?
[5:31] – Are we panicking too much?
[8:00] – How often does risk match their portfolio?
[11:30] – Should we adjust our risk level now?
[13:11] – Bucket strategy to mitigate risk
[14:53] – Taking unnecessary amounts of risk
[17:49] – Adjusting your risk strategy in retirement
[20:40] – Can you reduce risk without giving up growth?
A Quotable Moment:
“Anytime you get way above an average return, at some point the market has to give to get back to that average… That’s what markets do they aren’t always going to go up.”
-Phil Putney