Market MakeHer Podcast 73. Remix: Understanding Your Risk Tolerance with the Risk Pyramid
*previously recorded on 03/15/24, but still relevant* Last week we talked about creating quarterly financial goals with a fun activity, and we thought it would be a good time to also revisit your risk tolerance with this past episode.
At the time of recording, The Fed still didn’t cut interest rates, but projected they would 3 times, so it was a great time to lock in the higher rates that we saw in fixed income securities (bonds, etc) in the months that followed until rates were finally cut several times the last half of 2024. Did you notice your HYSA interest rate has come down since then? We did prepare you for that, so if you’re not able to stay updated on everything going on in the markets and with The Federal Reserve, you might want to subscribe to the podcast. 😉
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• What's your investment risk tolerance? (check out the risk pyramid below)
• How are you diversifying your investments in your portfolio?
• Are the interest rates on our high yield savings account coming down?
•What should we do with our cash to make sure it's out-pacing inflation?
Figure Out Your Risk Tolerance
There are lots of quizzes you can do at your brokerage firm or even government sites that help you figure out your risk tolerance for your personal situation.
The higher the risk the higher the reward, BUT, remember that also means there's a higher risk to lose your money. Diversifying is key. 😉
Risk Pyramid
High Risk - On Top
Medium Risk - Middle
Low Risk - On the Bottom
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High Risk Investments = Alternative Assets (Options, Futures, and Crypto is the most risky thing you can do with your money)
Medium Risk Investments = Fixed Income (government debt, corporate debt, real estate, blue chip stocks, growth stocks, etc.)
Low Risk Investments = Cash, Cash Equivalents (T-Notes, HYSA, Bonds, Money Markets, etc.) and you can get ETFs or Mutual Funds that have bonds and low-risk securities in them.
Figure out your risk tolerance and let’s see how that might change any of your Q2 goals when we do our Quarterly Financial Check-In! (Check out episode 72 to do your Q1 Financial Planning).
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Market MakeHer is an investing education podcast taught by a 15-year finance expert to her friend, a beginner investor. Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We teach complex investing topics in a different way - from "Her" perspective.
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Investing involves risk. There is always potential to lose money when investing in securities. Market MakeHer LLC provides educational content and resources for informational purposes only. We are not registered financial advisors & do not provide personalized investment advice. Consult with a licensed financial advisor before making investment decisions.