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    More or less risky as you become more secure

    Singuy's post made me reflect a bit on my risk tolerance. It's interesting I think the reverse has happened as DH and I have aged. When we were younger we had barely a EF feeling like we lived cheap and frugal and we dumped everything into index funds and let it ride through the terrible 2007/2008 crash. We had barely gotten out alive in the tech bubble burst and instead survived to buy a home and 10x our investment in about 2 years. So luck made us through it. Then on the other side of the recession we started to make more money and have an opportunity to invest in more different sectors and individual stocks so we did. Instead of becoming more conservative we got riskier as we got older and more established. Yes we have a large cash cushion but we now are of the mindset we have a bigger foundation and we have a bigger shovel in case we make a mistake so why not take a bigger risk reward?

    How do most of you feel?
    LivingAlmostLarge Blog

    #2
    So, I've become less risky as I've gotten older and have more responsibilities. For example, with two kids, I'm not going to risk a ton of money on Gamestop. I'm going to invest it in quality blue chips.
    james.c.hendrickson@gmail.com
    202.468.6043

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      #3
      It's situational. Risk for me is defined by my current situation.
      Back when I was first starting out I wouldn't have, nor probably could have, dumped a few thousand into a speculative investment.
      Now that I'm more established, have less debt, and make a higher salary, I can make those sort of moves.
      So I guess it's perspective.
      What was once considered risky is now not so much.

      That being said, I've always leaned to the conservative side with investments.
      Most of my portfolio is pretty boring.
      Doing the DCA thing for the long haul.

      Brian

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        #4
        Riskier but we still error on the side of conservative. It’s actually something we were recently discussing. We want to take on some additional risk.

        To Jame’s point, we can “afford” a bad investment because we don’t have anyone that depends on us but ourselves. That might look different in a few years if/when we have kids.
        Last edited by jenn_jenn; 09-28-2021, 01:17 PM.

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          #5
          Being financially secure gives you the ability to take some risk you might not be able to otherwise, however it seems prudent to gradually become more conservative as you age, because you will not have enough "time" to recoup a serious mistake or loss.

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            #6
            I think I've actually done both -- I've gotten more conservative, selling to hold a higher level of cash, whole at the same time becoming more willing to accept risk with my other investments. I currently have ~2yrs of essential expenses in cash, though of course most of it is held in sinking funds for short-term goals... But in my mind, by holding plenty of cash, I feel totally secure in being more risky with the invested money. While I'm not jumping head long into crypto currency, options, forex, and commodities, our investment portfolio is currently 5% bonds, 6% cash, 16% real estate, and 74% stocks (or just for market investments, 92.5% stock & 7.5% bonds)... Plus our primary home is debt free beyond those investments. Many would call that over-aggressive for a 35 y/o couple. But I'm perfectly comfortable, because I've backstopped my risk with cash & a debt-free home for security, and my overall investment strategy (DCA + a small single-stock collection for fun) is conservative in the long-term.
            Last edited by kork13; 09-28-2021, 11:01 AM.
            "Praestantia per minutus" ... "Acta non verba"

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              #7
              I agree with the others. I’m more willing to take on risk now because we can afford the potential loss but overall our portfolio is more conservative because I’m close to retirement and we have sufficient assets to do so. We’ve “won the game” as some would say. Why take risks you don’t need to take?

              Still we’re about 60% stocks and I’m not opposed to buying more, especially if we see a significant downturn.
              Steve

              * Despite the high cost of living, it remains very popular.
              * Why should I pay for my daughter's education when she already knows everything?
              * There are no shortcuts to anywhere worth going.

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                #8
                i find myself looking at risk more recently and willing to gamble more.
                LivingAlmostLarge Blog

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                  #9
                  More and less.

                  More:
                  A bit of investing "fun money" and experimentation is okay.
                  So is a bit of values-based investing.
                  Making a large purchase (house, vehicle) doesn't feel scary.

                  Less:
                  Not going to start another new business
                  Not going to take on a side hustle that exposes us to liability risk
                  Not going to pack up and move ourselves to a LCOL place where we know no one

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                    #10
                    Well, I was going to say--I've taken on more risk... but have I? I started out 100% bonds and added stocks over time. I think inflation has eroded my ROI. Maybe it would be more accurate to say the type of risk has changed. Less inflation risk and more equity risk.

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                      #11
                      Have to say I have always been the risk adverse kind of guy. Didn't buy a single stock before I have paid off my mortgage, student loan debt, and college tuition for all my kids. After that I started looking at lower risk stuff like bonds, CDs, or anything that can generate a pretty stable return. However given our low rate environment, I found inflation risk to be high, and zero upside risk to be high. You can't buy bonds when rates are near zero because the value of those bonds will only go down as interest rate rises.

                      So in the beginning I was full high risk...aka buying stocks some radio station recommended. Didn't really understand anything about a balance sheet or what gives a company it's value. I learned only one thing, perhaps just buy and hold. This is pretty much a crapshoot with only one strategy. I got pretty lucky with SHOP, but got unlucky with BZUN. It's really a 50/50 shot in the dark kind of play. However my risk tolerance was low so I bought in a tiny position of each while the rest went to Index funds.

                      SHOP's 12k->285k
                      BZUN 6k-->1600

                      As I learned more, did more research, used the tools of the internet to help me understand how to buy good companies more, I decreased my risk DRAMATICALLY even though I sold bonds/index funds and went to individual stocks. So buying individual stocks doesn't equal high risk. Buying individual stocks with only the knowledge of MSM headlines and basic knowledge of the company equals high risk...or borderline gambling.

                      My co-worker is my age and bought a bunch of companies his friend introduced him to. I looked over all of his companies and weeded all of them out and literally said to him "you have balls buying all these trash companies". He felt his friend is some stock picking god so. As Feb 2021 approached, he was up 50% on all the money he invested. Then the crash of March brought him down to break even. Today he is underwater while mine mostly recovered. He simply did not understand what he was buying. This is what high risk to me looks like.
                      Last edited by Singuy; 10-01-2021, 03:47 PM.

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                        #12
                        only as my taxable account supplies have grown. We've gotten a bit riskier w/ those savings. Our retirement stuff is pretty much the same. I did just take on a "sort" of risk by buying out my brothers half of a home we both jointly owned. I'm going to rent it to the public, through a management company. And this simplified things, for LLC's sake. Just crazy what rents are going for, seemed like a risk worth taking. We have become much more secure (this investment will be our only debt, and it's like 100k). Own our homes, cars, etc... I like our only debt, is also an engine of rent (Targeting $1600-1700 a month in this market). Some risk for sure, but seemingly worth it.

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                          #13
                          I think we've moved to a somewhat more balanced position in recent years. Moved our 401ks to a 70/30 asset allocation. Brokerage account remains closer to 83/12/5. Focus of late has been accumulating a cash position - targeting two years of expenses - to provide a measure of protection against a market downturn.

                          Plan is that as we start withdrawals from these accounts, we'll move the brokerage account toward a more balanced position with targeted sales as we're currently invested in eight funds, but with the majority of our position in a few funds. Have not "decluttered" to date as we've wanted to avoid cap gains taxes.
                          Money is better than poverty, if only for financial reasons

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