What is your risk number? Your risk number is the numerical value that represents how much risk you are willing to take when investing. Your risk number won’t be based solely on how much money you can afford to lose, or your age, or how much time you need to recoup any losses you may suffer, but what level of risk you feel comfortable with. Some investors can afford to take risks but would rather make safer investment choices and take less reward in exchange for peace of mind knowing they are working towards their financial goals while keeping their nest egg safe.
We have a risk assessment tool on our website that is very easy to use, but we’d love to sit down with you to conduct a risk assessment in person. Risk assessments are important because no two investors are alike. Investors who feel stress when watching short-term market fluctuations shouldn’t have a portfolio heavy with high-risk stocks. A balanced portfolio would be more to their comfort level. A young investor may be more open to taking bigger risks because they have the time to make up potential losses. Risk tolerance varies based on the individual and where they are in life.
Your investment strategy and portfolio should evolve over time. If you are a beginner investor who has yet to start a family, your risk number today will be different than it will be ten years from now when you are married with a child. When you approach retirement age you will want to reduce the risks you take to preserve wealth. If you’d like to learn about our investment principles and strategies, contact Alloy Investment Management at 800-689-3935. We will work with you to put together an investment portfolio that is based on your risk tolerance, timeline, and goals.