When investors talk about risk and risk tolerance, they are most often referring to the amount of volatility an individual feels comfortable with in their portfolio.
People who invest heavily in stocks in pursuit of higher returns are generally considered risk takers, while people who stick more to fixed income to protect their hard earned dollars from the ups and downs of the stock market are generally considered risk averse. But there are other ways to look at risk. For example, someone whose portfolio is chronically overweight in bonds, or who holds a large cash position over the course of decades, might put themselves at risk of running out of money in retirement because they missed out on a lifetime of stock market returns.
So what do we mean when we talk about risk, and what questions should you be asking to make sure your portfolio most accurately reflects your personality, goals, and preferences?
In this webinar Bridget Jones of Smart Sister Finance provides insights into the complex subject of risk, covering the following topics:
- How do we define risk?
- How much is right for you?
- Can we govern risk?
- How can we manage our emotional response to the risk of losses?