Money Forward

This blog is about money and trying to keep my money from flying out the window.

Thursday, February 15, 2007

What's your risk level?

A lot of people give advice about how much money you should have in stocks and what is smart investments considering your age and everything. This is generally good advice, but it will nto fit everyone. YOU need to be comfortable with your strategy, no one else. A good example is my father. He has a very high risk level. He's almost 60, and up until a week ago, he had 100% of his retirement in stocks. Seriously. Part of this was because he lost so much when the market fell a few years ago, and so he had a lot of making up to do. This is also his risk level. He doesn't mind the risk so much because he prefers the gains, and knows that over time he will come out ahead. He also does not plan on retiring any time soon, it just doesn't interest him that much.

Recently, as I said, he moved some money out of stocks. He thinks the market is going to drop soon. He wants to at least protect some of his money. This is a good move, and whether he's right or not, we'll have to see. But it shows that even he is becoming a little bit more careful, even if he only moved 15% of his money.

In my own strategy, I am more on his boat than others. I prefer to have as much in stocks as possible, and right now that's about 98% of my retirement money. I know I have a lot of time to let it sit, and there is potential for larger gains, so why not? It is all about being patient.

So what's the point? Listen to whomever you want, but go with what is comfortable for you. If a professional says you should have 90% of your money in stocks but you feel more comfortable with 75%, then go with 75%. Just know the consequences, which would be to make potentially less money over time. But also, if a professional says to put 50% in stocks and you want to do 75%, go for it. It's your money, but take responsibility if things go badly. For me, that means a lot of stocks for a long time. After all, it's all a big game, just remember what happens if you lose while you mainly think about winning.


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