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1021223-00006-00
Rogelio Gonzalez, CRPC®, CSRIC™
Financial Advisor, Prudential Advisors
Pacific Northwest Financial Group
7525 SE 24th Street, Suite 110
Mercer Island, WA 98040
Phone: 360-919-4271
July/August 2024
How Much Risk Can You Take
Whether your dream is to climb Mount Everest or sail the Caribbean in a pontoon boat, the amount of risk you feel comfortable with is different for everyone. That applies to investment risk, too. But how can you find your comfort level?
Your Risk Tolerance
Risk refers to market conditions that can negatively affect returns. Risk tolerance is your ability to accept the possibility of investment losses. Taking greater risk with your investments offers the potential for higher returns, but it also exposes your portfolio to substantial losses if the markets take a downturn. However, not taking enough risk can prevent you from earning returns that will help you reach your goals.Types of Investors
Investors generally fall into three categories based on their tolerance for investment risk.Aggressive investors are willing to accept more risk of investment losses in exchange for the potential for earning higher returns. Their portfolio typically holds equities and commodities, with little or no exposure to bonds or stable value investments.
Moderate investors are willing to accept periods of market volatility in exchange for the possibility of earning returns over time that significantly outpace inflation. Their portfolios typically consist of a mix of equities and income-producing investments, such as bonds.
Conservative investors accept little or no volatility with their investments. They seek income and capital preservation. Their portfolios hold investments that are highly liquid (i.e., can easily be turned into cash), such as certificates of deposit, money market accounts and U.S. treasuries.
Your Time Frame
Risk tolerance can change based on your age, goals and time horizon. Investors in their 20s, 30s and 40s generally can take more risk with their investments because they have many years before they’ll need their savings. As you get closer to retirement, you may want to shift some higher risk investments into less volatile, income-producing assets. Keep in mind, though, that keeping a portion of your portfolio in equity investments can provide a hedge against inflation.Your financial professional can help you design a portfolio based on your goals and risk tolerance.
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Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries. Offering investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing insurance companies. 1-800-778-2255. Prudential and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Prudential, the Prudential logo, and the Rock Symbol are service marks of Prudential Financial Inc., and its related entities, registered in many jurisdictions worldwide. Pacific Northwest Financial Group and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
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