Should You Rethink the Risk in Your Portfolio?
Your willingness and ability to take on risk in your portfolio has a significant effect on how your portfolio performs. However, perceptions of risk can be skewed by overconfidence, affective forecasting errors and other biases. In this episode, Mark Riepe explains how people’s tolerance for risk differs on a cognitive and emotional level, as well as how “risk capacity” is a more objective matter. Tobin McDaniel, Schwab’s SVP of Digital Advice and Innovation, joins Mark to discuss how investors view risk in real-world situations, and how they respond to changing market conditions. You can read more about risk capacity in this article by Season 1 Episode 2 guest Rob Williams. Risk-taking and realized versus paper losses is explained in this article from American Economic Review. Subscribe to Financial Decoder for free on Apple Podcasts or wherever you listen. Financial Decoder is an original podcast from Charles Schwab. If you enjoy the show, please leave us a ★★★★★ review on Apple Podcasts. Important Disclosures: Please read the Schwab Intelligent Portfolios Solutions™ disclosure brochures for important information, pricing, and disclosures related to the Schwab Intelligent Portfolios and Schwab Intelligent Portfolios Premium programs. Schwab Intelligent Portfolios® and Schwab Intelligent Portfolios Premium™ are made available through Charles Schwab a Co. Inc. ("Schwab"), a dually registered investment advisor and broker-dealer. Portfolio management services are provided by Charles Schwab Investment Advisory, Inc. ("CSIA"). Schwab and CSIA are subsidiaries of The Charles Schwab Corporation. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed. Diversification and asset allocation strategies do not ensure a profit and cannot protect against losses in a declining market. Investing involves risk including loss of principal. Hypothetical examples are for illustrative purposes only and are not intended to represent the past or future performance of any specific investment.Past performance is no guarantee of future results. The Schwab Center for Financial Research is a division of Charles Schwab a Co., Inc. Apple Podcasts and the Apple logo are trademarks of Apple Inc., registered in the U.S. and other countries. Google Podcasts and the Google Podcasts logo are trademarks of Google LLC. Spotify and the Spotify logo are registered trademarks of Spotify AB. (0419-96JD)
