As we mentioned in the previous articles, we know that our government only accounts for about 30% of our retirement income. The company pension plan provides another 30%, and many of us do not. Personal wise short-term and long-term investment is to make up for the short-term decline if he or she wants to live a comfortable life after retirement without giving up some retirement plans. To protect yourself from the impact of inflation, interest rates, business and market risks in your portfolio, it is wise to understand current economic conditions, invest in knowledge and diversify. In this article, we will discuss risk management.
1. Life cycle risk
In fact, the number of acceptable risks will change with the life cycle stages.
For example:
a) There is a higher risk for young people who do not have family members than middle-aged people who have families.
b) Retired couples who need income every month to finance their lifestyle are often more conservative than middle-aged people who have a family.
2. Employment risk
Government employees have higher income security than self-employed workers, and people working in the service industry often deprive workers or seasonal workers. If you doubt your job security, it is wise to balance your risk. You may consider saving some of your savings to very low risk debt securities in the case of layoffs.
3. Diversifying your investment
Diversification is a fundamental principle in portfolio management. It helps reduce overall risk by selecting securities for different types of investment instruments (not all eggs in one basket) in order to spread investment funds. Go to various investments and adjust your investment according to your needs, life cycle and economic conditions.
Orignal From: Personal Finance and Finance 20 - Risk Management
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