Broker Check

Find Out Your Risk Number

| July 20, 2018
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We face risk every day and often go about our lives blind to it until the unexpected happens. But when it comes to your money, unexpected isn’t always good. Do you know how much risk you can handle in your investments? More specifically, when markets head south, can you withstand the losses without losing sleep or panicking?

You might think you are okay with risk in your portfolio, but when push comes to shove, how much are you willing to lose?

What Is Risk?

All investments involve risk. Some risks are avoidable, some are not. Avoidable risks are those that take place when your portfolio leans too heavily on stocks or bonds that have been unstable in the past or when your holdings are not diversified enough. For example, you may be putting too much of your company’s stock in your 401(k) or you have too many overlapping U.S. stock mutual funds instead of being more globally diversified. Avoidable risks often occur when we underestimate risk and believe we can tolerate more than we can.

On the other hand, unavoidable risks are those that occur because our world is ever-changing, volatile, and we can’t predict everything. As much as we wish we could, unavoidable risks are simply out of our control. This type of risk includes unfortunate events like geopolitical issues and terrorist attacks.

The third type of risk is often unseen, but one that can impact your portfolio just as intensely as an obvious risk: the risk of being too conservative and not meeting your future goals. By overestimating risk and trying to avoid loss at any cost, you could be unintentionally sacrificing your future dreams.

How Much Risk Can You Handle?

Risk is different for every person based on their unique situation, stage of life, and personality. It’s not enough to mark off “moderate” on an investment questionnaire and call it good. While you can’t eliminate risk in your portfolio, you can ensure that the amount of risk you take correlates with the level of potential reward for you to gain. It is possible to match your investments to your goals and still be able to sleep at night during market downturns. The key is managing risk and knowing what you want and need.

What Next?

Since it’s so important to understand your personal risk preference, how do you figure out what it is? We offer an online tool based on Nobel Prize-winning research where you can find your unique Risk Number. Check out our online risk assessment tool to see where you stand today!

Once you know your unique risk number, it’s time to make sure your portfolio is aligned with it. Using your personal Risk Number as a foundation, we gather info, look at the facts, and build a portfolio that is right for you. Take the first step and reach out to me at 985-605-7185 or email me at jeremys@myharborwm.com.

About Jeremy

With nearly two decades of experience in the financial services industry, Jeremy Smith serves as a dedicated and knowledgeable financial advisor and the founder of Harbor Wealth Management. He specializes in serving retirees, pre-retirees, small business owners, and widows, providing a comprehensive array of investment management and financial planning services. Jeremy aims to serve his clients as a financial guide who is here for their every need, helping families find lasting solutions so they can focus on what matters most to them. To learn more about Jeremy, visit www.myharborwm.com or connect with him on LinkedIn.  

Securities and advisory services offered through LPL Financial, a registered investment advisor.  Member FINRA/SIPC.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. You should discuss your specific situation with the appropriate professional.  Investing is subject to risk which may involve loss of principal. No strategy assures success or protects against loss.

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