73. Replay: 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 episode we did on the “risk pyramid.”

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) up until several months ago. 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. 😉

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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 keep it in mind when we do our Q2 Quarterly Financial Check-In and see how it might change some of your investing goals for this year. 😉 If you haven’t done your Q1 personal finance goal planning, check out episode 72!

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Market MakeHer is an investing education podcast taught teacher-learner style by a 15-year finance expert, Jessica Inskip, to her very inquisitive beginner investor friend, Jessie DeNuit. We want to help you get better with your “finance-sis” (get it? No finance bros here). Our mission is to demystify the stock market and make financial literacy accessible to all self-directed investors! We believe that investing is for everyone and that's why we break down complex investing topics - from "Her" perspective. You’ll also learn about free tools and resources on our podcast and we offer a ton of free educational content on our ⁠website⁠ so you can become fin-fluent.

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