Steven England discusses Risk and Volatility in Retirement
Listen to the interview on the Business Innovators Radio Network https://businessinnovatorsradio.com/interview-with-steven-michael-englandpresident-of-capstone-estate-planning-discussing-risk-and-volatility-in-retirement/
Steven Michael England to discuss the complexities of navigating retirement amidst risk and volatility. Steven defines risk in the context of retirement planning, emphasizing that it relates to the potential for loss and fluctuations in the market. He introduces a method for assessing an individual’s risk and volatility score using software, highlighting that this score serves as a tool to evaluate whether clients are being adequately compensated for the risks they are undertaking. Throughout the conversation, Steven aims to educate listeners on the impact of market volatility on retirement, providing insights on how to manage these challenges effectively.
Effective retirement planning relies on a clear understanding of people’s risk and volatility scores. This score is more than just a number; it serves as a critical indicator of how well their investment strategy aligns with their financial goals and risk tolerance. Here’s why grasping this score is essential:
In the context of retirement planning, risk refers to the potential for loss in their investment portfolio, while volatility indicates the degree to which their investments fluctuate in value over time. Given that markets are inherently unpredictable, understanding the potential for loss is vital for making informed decisions about retirement funds.
Assessment of Risk vs. Reward: Their risk and volatility score helps to evaluate whether they are being adequately compensated for the risks they are taking. As Steven Michael England explains, risk itself is not inherently negative; rather, it’s about determining if the potential returns justify the associated risks. For example, if they have a high-risk portfolio but are only achieving average returns, it may be time to reassess their strategy.
Personalized Financial Strategy: Each individual has a unique risk tolerance. What one person can handle may be entirely different from another. By evaluating their risk score, they can tailor their investment strategy to fit their personal comfort level. This is crucial, especially as retirement approaches, because a strategy that works for one person may not be suitable for another.
Stress Testing People’s Portfolio: The evaluation process often includes stress testing, which simulates how their investments might perform under various market conditions. This allows people to see a range of potential outcomes, helping them prepare for market downturns. Knowing their score can provide peace of mind, as they’ll have a clearer picture of what to expect.
Adapting to Market Changes: The financial landscape is constantly evolving. Traditional strategies, such as the 60-40 portfolio (60% in stocks and 40% in bonds), may not be as effective in today’s market conditions. Understanding their risk and volatility score can help them adapt their strategy to current realities, ensuring that their retirement plan remains robust.
Long-Term Planning: As people are living longer, the need for sustainable retirement income is more critical than ever. A well-understood risk and volatility score can guide them in making decisions that ensure their money lasts throughout their retirement. It helps them avoid the pitfalls of reverse dollar cost averaging, where withdrawing funds during a market downturn can significantly impact their portfolio.
In summary, understanding their risk and volatility score is crucial for effective retirement planning. It not only helps them assess whether they are being rewarded for the risks they are taking but also allows them to create a personalized investment strategy that aligns with their financial goals and comfort level. By regularly evaluating this score and adapting their strategy accordingly, they can navigate the complexities of retirement planning with greater confidence and security.
Steven Shared: “Retirement and Wealth Preservation Strategies for their Retirement for Financial Peace of Mind. Tax Strategies to minimize taxes for them and their loved ones.”
Steven highlights that many traditional retirement strategies, such as the 60-40 portfolio (60% stocks and 40% bonds), may not be as effective in today’s market conditions. For instance, in 2022, both stocks and bonds experienced significant declines, demonstrating that relying solely on this traditional model can lead to unfavorable outcomes. Therefore, understanding one’s risk score is vital for making informed decisions about investment strategies.
Video Link: https://www.youtube.com/embed/SmXUDGuv_aM
About Steven England
Financial advisor and Retirement Planner since 1982, Best Selling Author of “The Wealth Lifestyle”, honored with numerous industry awards and honors of achievement. I value close business relationships with clients and treat them the way I would want to be treated.
Learn more: http://www.thewealthlifestyle.com/
DISCLAIMER: This information is for informational purposes only and should not be considered legal, health, investment, tax, or profession advice. We are not responsible for any losses, damages, or liabilities that may arise from the use of this podcast. This information is not intended to replace professional investment, tax, or legal advice. The views expressed may not be the views of the host or the management.
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