Facebook-f Twitter Linkedin-in Youtube Phone
Facebook-f Twitter Linkedin-in Youtube

What is Risk Tolerance, and What Does it Mean for You?

What is Risk Tolerance, and What Does it Mean for You? Hilltop Wealth Solutions

The term “risk tolerance” gets thrown around a lot when it comes to investing. So, what does it mean, and how does it relate to retirement?

In simple terms, risk tolerance is how comfortable you are with potentially losing money on an investment.[1] If you don’t want to lose any money at all from your investments, you would be considered to have a low risk tolerance.[1] If you are okay with potentially losing some money, you would be considered to have moderate risk tolerance.[1] And if you are comfortable with potentially losing a lot of money, then you are considered to have aggressive risk tolerance.[1] These are all relative terms and may manifest differently given your unique financial situation and the asset or investment in question.

So, what is the benefit of having aggressive risk tolerance? Why would someone be okay with potentially losing a lot of money? A well-designed aggressive portfolio may be desirable because, generally, it comes with the possibility of relatively higher returns.[1] This style of investing is not for everyone and is not guaranteed to pay off. It is entirely possible to lose money from this style of investment, but some people are looking for this kind of investment based on their specific financial situation.

Conservative portfolios tend to be important when it comes to retirement because as a person approaches retirement age and is closing in on their total wealth level, they often look to reduce the risk of losing their investments. They might shift their assets into guaranteed vehicles like CDs and short-term T-bills.[1] Again, this strategy isn’t right for everyone, but it is an investing approach commonly incorporated into a retirement strategy.

Risk tolerance is a hard thing to figure out. Some people have an innate sense of what they are willing to risk, and for others, it takes time and experience before they come to understand what is best for their situation.

The finance world is complicated. There are many different puzzle pieces to your wealth management picture. If you are interested in talking with someone to guide you through that world, consider reaching out to one of our professionals today for a complimentary review of your situation.

 

 

This article is intended for educational purposes only and is not intended to serve as the basis for any purchasing decision.
Hilltop Wealth Solutions (“Hilltop”) is a registered investment advisor with the Securities and Exchange Commission (“SEC”) and only transacts business in states where it is properly registered or is excluded or exempted from registration requirements. SEC registration does not imply a certain level of skill or training. Please refer to our Form ADV Part 2A disclosure and Client Relationship Summary (Form CRS) for additional information regarding the qualifications and business practices of Hilltop. Hilltop Wealth Solutions, LLC is an SEC Registered Investment Adviser firm. Hilltop Tax Solutions, LLC, is an affiliate of Hilltop. Wealth Solutions that provides tax and bookkeeping services.
Archived Posts
Share This Post!
Facebook
Twitter
LinkedIn

© 2022 Hilltop Wealth and Tax Solutions

Website Disclosures

Hilltop Wealth Solutions (“Company”) is an SEC registered investment adviser located in Mishawaka, IN with branch office located in MI and other locations throughout IN.  The Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.  The Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.  Accordingly, the publication of the Company’s web site on the Internet should not be construed by any consumer and/or prospective client as the Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by the Company with a prospective client shall be conducted by a representative that is either registered or qualified for an exemption or exclusion from registration in the state where the prospective client resides.  For information pertaining to the registration status of the Company, please contact the SEC or the state securities regulators for those states in which the Company maintains a notice filing.  A copy of the Company’s current written disclosure statement discussing Company business operations, services, and fees is available by going online via the SEC’s Investment Advisers Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC #801-115255.

The Company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to the Company web site or incorporated herein and takes no responsibility, therefore.  All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by the Company, will be profitable or equal any historical performance level(s).

Certain portions of Company web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, the Company (and those of other investment and noninvestment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from the Company, or from any other investment professional.

The Company is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice.

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if the Company is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of the Company by any of its clients.  Rankings published by magazines and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.  Rankings are generally limited to participating advisers.

To the extent that any client or prospective client utilizes any economic calculator or similar interactive device contained within or linked to the Company web site, the client and/or prospective client acknowledges and understands that the information resulting from the use of any such calculator/device, is not, and should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from the Company, or from any other investment professional.

Each client and prospective client agrees, as a condition precedent to his/her/its access to the Company web site, to release and hold harmless the Company, its officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from the Company.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

Client Login
Contact Us