Understanding risk thru adventure learning

“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return.” – Investment Definition by Benjamin Graham and David Dodd

MANAGING FINANCIAL RISK

Here’s a reality check about risk: All investments carry some degree of risk. By better understanding the nature of risk, and taking steps to manage it, you put yourself in a better position to meet your financial goals; just as we learned to develop awareness and skills to use the ropes course equipment, we also needed to execute it flawlessly as our colleagues’ life was literally in our hands.

“Rule #1: Don’t lose money. Rule #2: Never forget rule #1.” – Warren Buffet

Diversified Asset Allocation–Basically, don’t put all your investment-eggs in one basket. By including different asset-classes in your portfolio (e.g. stocks, bonds, real estate, cash), you increase the probability of satisfactory returns (while others are flat or negative). This can be achieved via an Index Fund (UITF, MF, ETF).

Hedging (buying securities to offset potential losses on another investment) and Insurance– can provide additional ways to manage risk. Both strategies typically add cost, which reduces potential returns, but it’s a small price to pay for safety.

A VUL (Variable Life Insurance with an Investment component) can be an example of this depending on one’s goals/perspective.

Risks come from not knowing what you’re doing. The Adventure learning experience made me relearn to listen through the fear; At some point, we were scared & got caught up in what if’s, complaining and being fearful that we weren’t listening to the very instructions for the safety of our lives.

You cannot just “intend” your way towards your (financial) goals, you need to implement and DO Not Investing is riskier these days!!

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The writer wears many hats: RFP®–Registered Financial Planner | Licensed Real Estate Broker| Public Speaker |Content Creator-www.vernongo.