Everyone wants to make money, no one wants to lose it. It looks very simple.

Unfortunately, not a lot of financial instruments that can provide such a guarantee. Typically, you want to earn enough money to retirement, you have to take some risks.

However, if your financial professional is really looking out for you, he will put as much emphasis on risk management as he did to help you get the best return.

Most planners will talk about risk tolerance, and ask your age, your income, your net worth and problems, when you want to retire to determine your ability to deal with market volatility. But there should be so much better than it. Our abbreviation for our process – CAN: ability, attitude, need. You really can not put together a financial plan workablË not consider all three. It broke this:

C is the capacity

This is how much you can afford to risk the nuts and bolts. In this capacity that you absorb losses do not affect the ability of your retirement standard of living. This is the danger of an important part of the dialogue – but if you give it too much weight, it could throw things. For example, a consultant may put the client into a book he was uncomfortable, just because he has a high net worth, and the consultant’s opinion, capable of losses. Or, he could put a young, but risk-averse individual vehicles become more volatile, because he / she should have “time to rebound.”

Typically, a customer requires a “conservative” portfolio, but this is a SUBJective items. When you say you risk adviser, it is concrete. Think about the amount of USD in:? How much are you really in danger, if there is a downturn in the market

A is the attitude

Once you’ve sorted out your capacity for risk, you need to do some introspection, and make sure you are how you want to lose money. This is not something you can afford it; this is about your mood. You have character and desire to pursue a more favorable result – higher returns – less favorable risk results in – a terrible loss

In my company, we use a software program called the Riskalyze , which is based on behavioral psychology and how people make reallyThe choice between qualitative and opportunities to help customers and in-depth assessment of their true feelings. I t assignee your number from 1-100, where 1 is the most conservative approach and the 100 most volatile. Then, we put a person’s current portfolio and see how their scores for Riskalyze, and make adjustments if necessary. And it is usually necessary if they had not put the risk into account.

A couple came in recently, their score is 19 100 which is extremely conservative. But their current portfolio is 55 this figure seems fairly middle section of the road, but for them, in a market downturn loss can be devastating.

N Need

Finally, take a look at your financial vehicles must be how many times to meet the needs of your income plan is very important. In some cases, individuals may have a little more risk in order to make up for the shortage of their savings than they want. But we also see who is risking more than the actual need to make their retirement plans job.

For example, if you need a 3% rate of return in order to support your income plan, and decide what you want is another increase of 2%, you can limit your risk of a vehicle, will provide 5% return. Why target return of 7% 8% risk if needed may adversely affect your portfolio

A key retirement plan is this: if you have enough, never take risks do not have enough. You save and invest your money for the purpose, and this purpose is to support your lifestyle when you do not work. Getting there is not the end of it – you have to make the money last

Navigate his own way, and by retirement just across the Golden Gate Bridge to drive your own car a little bit. You’ll never make that journey fog, if there is no fence, keep you from falling off the edge. Management fluctuations may like to wear your portfolio fence, so you move forward  in the right direction

If you do not feel comfortable with your current financial strategy – or, if the concern is to let you in at night – to talk to you the practice of financial professionals related to CAN. It can make all the difference.