So you’ve decided to invest. You have to now figure out how much risk you’re able to take. The more risks you take, the more returns you could possibly see. However, more risk can also be damaging. Differences and changes in value can lead to worrying and fear as you work towards better returns. Here’s some ways to help determine how much risk you should and shouldn’t take.
1. Understand your risk tolerance. Your risk tolerance is how much you feel like you can emotionally handle as values fluctuate. If you’re going to go crazy with stress during an aggressive holding, you might want to lower your risks a little bit. This stress can often cause investors to buy their stocks high, sell them for cheap and potentially hinder their success in the future.
2. Find a solution. After you begin to understand your tolerance, try and be honest with your results and how much you can handle emotionally. Even though a better return could be out there, you don’t want to take on too much. Your risk tolerance should be used in line with your age, income level and financial goals when trying to invest.
3. Risk Capacity is important too. Risk capacity can be used in line with or completely independent from risk tolerance. You need to be honest with yourself about how many risks you can take and apply to your portfolio. If you don’t have the time to rebuild your portfolio after a loss, you should lessen your risks.
Of course it’s not easy to have a worry-free retirement when you’re retirement nest-egg is still invested on the risky stock market. On-going fees and commissions along with the risk and corruption that exists within the financial industry could cost you a great deal of your retirement savings…money you can make up if you’re already in retirement and not working. Get educated on the exclusive Crash Proof Retirement System- guaranteed to protect your principle so when the market crashes, your accounts satay event, but can also be designed to generate income and take advantage of market increases. Start your education today by calling 1-800-722-9728 or go to Crashproofretirement.com and register to attend a no-cost/no-obligation educational evet with the creator of the proprietary Crash Proof Retirement System: Phil Cannella.