Disruptive Technologies With David Scranton And Tobin Smith – December 27, 2015
Guest: Tobin Smith
The Income Generation With David J. Scranton
It’s important to know that people perceive risk in different ways. Everyone has their own ideas of what’s risky, whether it’s backed up by probabilities or not. For a person who’s grown up swimming only in a pool, the idea of swimming in a lake may feel risky. Taking it a step further, a person who often swims in the ocean with tides and currents won’t view an average stay in the ocean body surfing is risky at all. In fact, many ocean swimmers limit their swimming to and waves are below a certain height and they will consider themselves conservative and risk averse. But you can see why a person who has only swam in a pool or a lake could view any swimming in the ocean at all as high risk, it’s all relative and based on experience and what you know and it’s the same with investments. A financial adviser may deal with clients that primarily delve into the stock market and may be very adept at what he or she does. In fact, the adviser may not be knowledgeable of alternative investments. This advisor is likely to view the stock market in some sectors as conservative while other sectors he’ll deem aggressive or risky. Like the ocean swimmer, he thinks a two foot sea is risk free because he’s seen the ten foot swells. Well many who are in or near retirement shouldn’t have much or anything in the stock market. To the adviser, like the ocean swimmer, that is conservative. That word may mean something that is different, something that is still too risky for many just because they don’t realize it because of their perspective. This happens a lot, a pre-retiree may sit with an advisor who primarily works with the stock market and tell that advisor that they want conservative investments. The adviser may suggest conservative stocks or stock funds which seem appropriately conservative to him or her but could contain far more risk than the investor ever wanted. And what I’m going to do is explain many investment choices in the risk categories so that you are better prepared to understand the likelihood of results or failure among different categories. The information is based on a number of things including potential price wings, guarantees, performances story, volatility, liquidity and several other generally accepted criteria. I’ll also discuss the various inputs that you should use to determine what your risk level should be so that your own risk assessment isn’t just a feeling that you have.
**Disclaimer: Sound Income Strategies, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Past performance is not an indication of future results. Be sure to first consult with a qualified financial advisor or tax professional about your specific financial situation before implementing any strategy discussed herein.