Luke Milholland CFP®,ChFC®,CLU®

Stocks, Bonds, Mutual Funds

For years the industry has used the same ole investing stereotypes.

They go something like this...

If you are young then you have time to make up for downturns in the market, therefore you must have an aggressive risk tolerance, whereas older investors need to safeguard what they have already built so they must align with a conservative risk tolerance.

If you have ever talked to a traditional advisor or financial rep (aka sales person), then chances are you probably know what it feels like to be put in a box and stereotyped based on your age or what “should be”.

What’s wrong with this approach?

More often than not those assumptions are just plain wrong.

Research suggests that more than half (52%) of investors under 30 years old don’t fit the “aggressive” stereotype. Conversely, stereotypes didn’t pan out any better for clients over age 70. 53% of them didn’t fit into the “conservative” box either.

What if your car started less than half the time? How confident would you be that it would get you to your destination as planned?

What happens when more than half of all investors are invested wrongly? When markets fluctuate they panic. They make emotionally charged decisions out of fear, or perhaps they buy out of greed. Either reaction can sabotage the achievement of their goals.

Sadly this cycle often repeats itself until the investor becomes jaded. Just like that unreliable car - they don’t trust it. Not knowing what else it could be they begin to think that something is wrong with them or that capital markets are too scary.

In a nutshell, stereotypes don’t work.

They don’t work because terms like “conservative”or “aggressive” are too subjective.  And those are the fairly straightforward ones! Try “moderately conservative” on for size? What one person means by “conservative” might mean something completely different to someone else.

Imagine the trouble I would be in if my wife told me to come home with a “conservative” new car for the family and I showed up with a sports car?

Details matter. When things are too important to mess up, we use numbers.

So why are so many investors still using antiquated methods to build their investment portfolios?  Perhaps it’s because they don’t have time or maybe they just don’t know that there is a better way.

When it matters, use precision.  

If you want to know precisely how much risk you can handle, you can.  

What if, regardless of stereotypes or market conditions, you had a 95% probability that your portfolio would be in a specified “comfort zone”?

Are you ready to leave stereotypes behind?


Take 5 minutes today and discover your very own Risk Number!

Get My Risk Number

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