We all know that investments carry inherent risk but knowing how much risk is not always clear and often misunderstood.
The truth is, it can be very difficult to determine the level of risk you are taking with your investments because there is not really a clearly defined method to figure it out.
This leaves investors resorting to other forms of data to help navigate their decisions such as past performance or a rating system such as Morningstar.
Don’t get me wrong, this data is important but it does not help to determine the level of risk the investment carries and leaves investors potentially taking on more risk than they realize – and that’s not what you want for your portfolio.
So here is what to do.
First, learn and understand the level of risk you are willing to accept. This should be done before you even begin looking at investments.
I came across a very simple and easy to use questionnaire to help you out with this. In a couple of easy steps, you can learn your Risk Score based on your responses.
The questionnaire measures the degree of risk you are willing to take through carefully chosen questions and then gives you a Risk Score.
The higher your Risk Score, the more risk you’re willing to take.
Your Risk Score can then be used to help identify investments that are within your risk tolerance.
Now, I realize that there are likely some people who will be a bit presumptuous about this and assume they already know that they are aggressive or conservative and want to skip to the next step.
However, just knowing this about yourself does not translate to building a portfolio nor does it ensure that an investment matches the level of risk you are willing to take.
Knowing your Risk Score is the first step but once you know your score, you have to then identify the investments you have that are not in alignment with your score and remove them from your portfolio.
It is not uncommon for me to hear from clients who have a low-risk score only to learn after reviewing their portfolio that they are actually being pretty aggressive.
As you can imagine, this can be a real problem if not corrected.
Maybe that’s you. Maybe you have investments but don’t really understand what you have or know whether you are being too conservative or aggressive.
The solution is to have your investments ran through a vetting process to see what the risk level is for each holding.
We have a portfolio analysis process that we use that does just that and actually gives each investment a score to help match with your personal score. It’s really pretty neat and what I find is that many misaligned portfolios can be corrected with a few small tweaks.
I have done this for many investors and can potentially do this for you if you qualify. Qualification is based on the number of assets you have in your investment portfolio. If you have $250,000 or more in an investment account I will do this for you completely free of charge.
Now, I cannot do this for everyone – there is simply not enough time. So, if you want me to do this for you don’t wait because I don’t know how long I will have this offer available.
This is by far the easiest method I know of to get you the information you need to make the very best investment decisions.