Today's Hack

Everyone is different when it comes to risk tolerance. A lot of us think we are risk-averse, but we may be taking on more risk than we realize. On today’s episode, Phil is going to discuss risk aversion and how it affects our retirement plan.

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Show Notes For This Episode

Other Retirement Facts:

“Risk-averse” has been a popular buzzword lately. A lot of people come to Phil and tell him their portfolios are risk-averse. However, many of us don’t realize how much risk we are taking on and where it is coming from. On today’s episode, Phil is going to discuss what being “risk-averse” means and how risk plays into our overall financial plan.

When we think of risk, it’s usually in relation to the stock market. There is a lot more to it though. Inflation is also a type of risk. In the past few months, we’ve seen everything from gas prices to grocery bills rise. Does your plan account for this type of risk? Are you managing your plan well by keeping up with inflation?

On a realistic level, you cannot avoid all risks. You need to take on some in order to have a return. Stocks are always volatile; they are inherently risky but they can also have great rewards. It’s important to trust your advisor and portfolio, don’t get scared, and take out investments. The market is always moving up and down. The uptrend of the market is not always sustainable. It’s best to trust your advisor in these moments rather than making rash decisions.

Phil says the big problem with risk is the lack of education. A lot of people don’t realize the risk involved with retirement accounts like 401(k)s. Take the time to understand what you are comfortable with. Once you understand your risk tolerance level your advisor will build you a portfolio to match that.

Listen to the entire episode or skip ahead using the timestamps below. 

[0:28] Enjoying the fall

[1:27] California’s new law

[2:38] $600 IRS Report

[6:00] Being risk-averse

[7:14] Risk of inflation

[9:33] Market risk

[12:00 ] Why are we at risk?

[14:04 ] How do we address risk?

A Quotable Moment:

“Don’t risk your retirement based on what you’re thinking is less risk.”

-Phil Putney

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