PRISM: Prioritizing Your Goals

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  • 1.  Step 2 - Lesson 5: Financial Aspects of Risk

    Posted 12-30-2021 15:54
    Edited by Jenna Brashear 12-30-2021 15:57


    Reflect      

    So far, we've approached risk from the standpoint of timing. However, in this lesson, we're going to address risk from the standpoint of cash flow. We will specifically pinpoint and reflect upon how much of your planned spending will come from non-portfolio income. 

    Engage  

    We ask that you watch the video, fill out the right side your risk assessment questionnaire and then respond with your results. Note: Please fill out a separate risk assessment questionnaire for each of your goals. 

    In the comments, we encourage our members to share their results from their own risk assessment questionnaire as well as consider these three questions: 

    1. When you filled out the right side of your worksheet, what was your result for the second question: How much of your spending needs are covered by non-portfolio income? 
    2. What do you think your financial risk tolerance result indicates about your overall investment ability? 
    3. How do you feel about your financial risk tolerance? Confident, worried, inconclusive, confused, etc.? Share your reaction. 

        Example:  

        1. Right now, most of my spending needs is met by my income and secondary savings for retirement and other long-term goals are met by portfolio income. 
        2. I got a score of 12; therefore, I am on the edge of moderate-to-high financial/psychological risk tolerance. This means that there are ways I can improve and I shouldn't be overconfident in how aggressive I am in the market. 
        3. I am fairly confident in my risk tolerance since the majority of my investment goals are long-term; meaning I have time to take risk and weather the ebbs and flows of the market, but should slowly get more conservative as I approach my goals in the next 15-20 years. 

        LINK TO THE RISK ASSESSMENT QUESTIONNAIRE WORKSHEET


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            Jenna Brashear
            AAII Community Manager
            Chicago, IL
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          1. 2.  RE: Step 2 - Lesson 5: Financial Aspects of Risk

            Posted 02-16-2023 09:16
            Edited by RICHARD DOWER 02-16-2023 09:27
            1. Some of our needs are met by non portfolio income.  Although this varies considerably from the first few years until the last few years as we pay off the mortgage, I start receiving social security, and finally, move into an independent living home.  From the time I get social security to the time we move into our living space we won't need to take withdraws for anything other than large medical bills.  Medicare, gap insurance, and Long Term Care insurance  are also non portfolio sources to help offset these unknown dastardly expenses.
            2. My score was 11, so I also have a high moderate risk tolerance.  This means my risk tolerance is very much in line with my actual investing habits or allocations.  Correction:  I misread the grid, I intersect at aggressive.  That doesn't change much though.
            3. A High Moderate Risk investing tolerance is what I expected.  Most of my goals are long term so I should be able to handle market ups and downs confidently. 



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            RICHARD
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