Ep 307: How do you know if you’ve been too risk adverse?
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Investopoly
Ep 307: How do you know if you’ve been too risk adverse?
Jun 05, 2024 Episode 307

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In this episode, Stuart explores the often-overlooked dangers of being too risk-averse in financial planning. He argues that an excessive focus on reducing perceived financial risk can jeopardise your lifestyle goals due to the high opportunity costs involved. Many people fall into the trap of continuously repaying debt at the expense of exploring other investment opportunities, resulting in a limited risk tolerance that may not serve them well in the long run.

Stuart emphasises the importance of becoming comfortable with perceived risk and adopting a long-term investment strategy. He explains that most people share a similar risk profile, seeking average returns over time rather than chasing high-risk, high-reward scenarios. He focuses on evidence-based and rules-based investing and illustrates how market volatility is less concerning when viewed over extended periods.

Education is highlighted as the key to reducing perceived risk. Investors can make informed decisions without fear by understanding basic investment principles and seeking professional advice. Stuart also suggests starting small to build confidence and familiarity with investments.

Listeners will gain valuable insights into balancing risk and reward, and how taking calculated risks is essential for achieving financial and lifestyle goals. Tune in to learn if you're taking enough risk in your financial strategy.

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IMPORTANT: This podcast provides general information about finance, taxes, and credit. This means that the content does not consider your specific objectives, financial situation, or needs. It is crucial for you to assess whether the information is suitable for your circumstances before taking any actions based on it. If you find yourself uncertain about the relevance or your specific needs, it is advisable to seek advice from a licensed and trustworthy professional.