Ep 2: Should You Reduce Your Risk?

The Direction:

Too often, people will have more risk in their portfolio than they realize, and that can be a real problem. Today Marvin will tell you how to determine how much risk is appropriate for you, share an example of what can happen if you don’t plan properly, and explain the rule of 100.

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What You’ll Learn On This Episode:

Successful planning is as much about protecting what you have as it is about adding to your portfolio. The way you do that is through managing your risk.

On the first episode of the podcast, we laid out the first critical question for retirement and that’s where income will come from. Now it’s time for the second critical question and that’s whether you should reduce the risk in your portfolio.

You’d be surprised how many people come into our office for the first time and aren’t comfortable with the amount of risk they’re taking on. Many times it’s because they’ve been not to worry about it or it’s just a paper loss by a previous advisor or tried to do it on their own.

So it’s critical to make sure you aren’t taking on more risk than you need to and that you are comfortable with the amount of risk you have. How can you do that? The first thing we do is as if the market started to decline, what is the highest amount you’d be willing to lose before you became concerned or started losing sleep?

But we also can stress test your portfolio to give you a clear picture of what to expect in good times and bad. We’ll run scenarios to help you see the worst-case losses to find out if that’s something you’d be able to withstand.

Ultimately, this is an aspect of your plan you want to get right. As we saw in 2020, the market can tumble unexpectedly fast and having a plan to manage your risk is imperative. If you aren’t sure about your portfolio, contact us and get a complimentary strategy session with a member of our team.


1:30 – Background on this income conversation

3:06 – Should I reduce my risk?

3:59 – Client example of appropriate risk

6:06 – How much risk are you comfortable with?

7:54 – Rule of 100

9:05 – Get a stress test

Featured Takeaway:

“Most of the time, I find that clients are taking way too much risk in their portfolio, and they don’t want to.” – Marvin Mitchell

Related Resources:

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More Episodes:

Ep 3: What to Know About Estate Planning with Rudy Beck

January 21, 2021

What kind of documents do you need prepared when it comes to estate planning? Is your estate set up in a way that makes sense for you? Find out what you should do from attorney Rudy Beck.

Ep 1: Where Will Your Income Come From In Retirement?

November 6, 2020

On the first episode of Rethinking Retirement with Marvin Mitchell, Marvin will introduce you to the new podcast, tell you a little about his firm, and explore one of the central retirement planning questions about where you’ll get your income.

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