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Tag Archives: risk tolerance

What is Your Risk Appetite?

The following is a guest post. If you would like to submit a guest post, please contact me.  There are an endless amount of investment vehicles and assets available to investors today and it can be difficult to pick the ones that best suit your needs. If you are considering investing for the first time then the first thing you need to do is assess your risk appetite. Once you have managed this, you are ready to do some research and put together your own portfolio of investments. What is risk appetite? Also known as risk tolerance, risk appetite refers to your desire and ability to take on financial risk. The financial markets are in constant flux and risk is essential for profits and losses to be made. Risk can be measured in terms of the likelihood of the risk occurring and also its impact. The general rule of thumb is the higher the risk you take on, the greater the potential reward. How much risk should I take on? To answer this question, you will need to look at more than just your personal attitude to risk. The most important factor is your personal circumstances, in particular your proximity ...

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How Often Should You Rebalance Your IRA And What Funds Do You Choose?

Hopefully everyone reading this already has some form of retirement account set up or is planning to get started in the near future. I began contributing to my retirement plan as soon as I had a real job, which wasn’t until I was 26 (it takes a long time to get through optometry school!). I didn’t know anything about the stock market or planning for retirement. I only knew that my employer was offering a match up to 3%,  and I am not one to pass up free money. While I wish I had started saving a higher percentage of my salary from the beginning, hindsight is always 20/20, and I can only go forward. Now that I have been saving and slowly increasing my contributions, I always run into the dilemma of when to rebalance my IRA and what funds to invest in. Since I could never find the perfect answer, I have never really rebalanced. Knowing I should have done this a while ago,  I’m finally taking action, and October 2012 seems like the perfect time. While there are tons of ideas and formulas, it comes down to a few simple steps. As a disclaimer, please remember, I majored in science, not finance. What is your risk tolerance? If potential declines in ...

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