Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure

If you're looking how to quantify risk tolerance and how to determine the appropriate exposure to stocks, you've come to the right place. Financial SEER is a way to quantify your risk tolerance so you can try to make investment returns in a risk-appropriate manner. SEER stands for Samurai Equity Exposure Rule.

This post is also for someone who is wondering:

  • Whether they have the proper asset allocation
  • If there is a way to reduce investment stress while still benefitting from returns
  • How to quantify their risk tolerance
  • How to continue moving forward on their path to financial freedom despite all the uncertainty
  • Whether the stock market is in a big bubble

Greed And Fear Control When Investing

One of my primary goals on Financial Samurai is to help readers build meaningful wealth in a risk-appropriate manner. You need to learn how to quantify risk tolerance before making the right amount of investments. Financial SEER serves to quantify your risk exposure by calculating how many months you are willing to work to make up for a potential investment loss.

With the constant push and pull between fear and greed, finding a way to quantify your risk tolerance is important. You don't want to let your emotions take over when investing. This is what we call investing FOMO and real estate FOMO.

Instead, you must find a way to invest based on your risk tolerance and stay the course over the long term. Otherwise, you may lose lots of money, which ultimately means you lose lots of time. And time is your most precious asset of all!

Control Your Risk Exposure With Financial SEER

I started my career soon after the 1997 Asian Financial Crisis. Back then, many international college students in the US had to drop out due to a sudden and massive devaluation of their respective home country's currencies. It was a black swan event that disrupted millions of lives, just like the pandemic today. I fully appreciate how hazardous the road to building great wealth can be.

Even the best-made plans can be laid to waste due to some unforeseen exogenous variable. We always hope for good surprises along the way. The coronavirus pandemic is certainly one of the biggest unforeseen black swan events in our lifetime. Now there's another bear market in 2022 with the Fed hiking rates and inflation at 40-year highs.

Unfortunately, life always has a way of kicking us in the face after knocking us in the teeth. Let's always be thankful for what we have and demonstrate kindness to those who are experiencing difficult times.

Most investors overestimate their risk tolerance, especially investors who've only been investing with significant capital since 2009. Once the losses start piling up, it's not only the melancholy of losing money that starts getting to you, it's the growing fear that your job might also be at risk.

The Richer You Are, The Harder You May Fall

You might also erroneously think that the richer you get, the higher your risk tolerance. After all, the more money you have, the bigger your financial buffer. This is a fallacy because the more money you have, the larger your potential loss. For most rational people, their lifestyles don't inflate commensurately with their wealth. 

This is why even rich people can't resist a free rubber chicken lunch.

Further, there will come a time when your investment returns have a larger impact on your net worth than your earnings. As a result, the richer you are, the more dismayed you will be to lose money.

Your main hope for recovery is a rebound in investment performance because your work earnings won't contribute much at all.

If you've been able to amass a large enough amount of capital to never have to work again, you should focus more on capital preservation instead of maximum returns.

You don't need to be a great investor to get rich. You just need to be a good-enough investor. A good investor is able to make risk-appropriate investments to avoid blowups. Over the long run, a good investor will likely accumulate a lot more money than they need.

How Most Of Us Rescue Our Bad Investments

The reason we all continue to fight in this difficult world is because we have hope. But eventually, our hope fades because our brains and bodies slow down. When we're younger, we often think ourselves to be invincible. Then, eventually, we start experiencing the realities of aging.

It is due to our fading abilities that we must bring down our risk exposure as we age.

It is only the rare bird that goes all-in after making enough money to last a lifetime to try and make so much more. Sometimes they turn into billionaires like Elon Musk. But most of the time they end up going broke and filled with regret.

The only way most of us can rescue our investments after a market swoon is through contributions from earned income i.e. our salaries. We tell ourselves that when the markets are down, that's alright because we'll simply invest more at lower prices.

However, lower prices don't necessarily mean better value if estimates are cut, but all other things being equal, we like to trick ourselves into believing we're getting a better deal all the same.

History Of Bear Market Declines

To understand reward, we must first understand risk. Since 1929, the median bear market price decline is 33.51%, while the average bear market price decline is 35.43% since 1929.

Therefore, it's reasonable to assume that the next bear market could also bring equity valuations down by 35% over an 8 – 10 month period. Heck, in March 2020 alone, the S&P 500 declined by 32%.

If you didn't have the appropriate risk exposure, you were really sweating bullets, especially you were looking to retire in 2020. Luckily, the bull market resumed soon after the big correction.

Historical bear market declines

Let me share a quantifiable way to measure how much equity exposure you should have based on your risk tolerance.

I'm calling it the Financial Samurai Equity Exposure Rule or Financial SEER. It's an appropriate acronym because seer means a person who is supposed to be able, through supernatural insight, to see what the future holds.

How To Quantify Risk Tolerance Using Financial SEER

Most people just regularly invest in stocks over time through dollar cost averaging. They have little concept of whether the amount of stocks they have as part of their portfolio or their net worth is risk appropriate.

Hence, to quantify your risk tolerance based on your existing portfolio, use the following formula:

(Public Equity Exposure X 35%) / Monthly Gross Income.

For example, let's say you have $500,000 in equities and make $10,000 a month. To quantify your risk tolerance, the formula is: $500,000 X 35% = $175,000 / $10,000 = 17.5.

This formula tells you that you will need to work an 17.5 ADDITIONAL months of your life to earn a GROSS income equal to how much you lost in a -35% bear market. After taxes, you're really only making around $8,000 a month, so you will actually have to work closer to 22 more months and contribute 100% of your after-tax income to be whole.

But it gets worse. Given you need to pay for basic living expenses, you need to work even longer than 22 months. Good thing stocks tend to rebound after an average bear market duration of 10 months, if you can hold on.

Given everybody has a different tax rate, I've simplified the formula using a gross monthly income figure instead of a net monthly income figure. Feel free to adjust the Risk Tolerance Multiple based on your personal income tax situation.

Quantifying Your Risk Tolerance Asks How Much You Value Your Time

Quantifying risk tolerance by calculating working months is the best way to go because time is money. The more you value your time, the more you hate your job, and the less you desire to work, the lower your risk tolerance.

The classic scenario is a 68-year-old retiree with a $1,000,000 portfolio living off $20,000 a year in Social Security and $20,000 in dividend income from his portfolio.

If his portfolio loses 30% of its value because it is way overweight equities, it is almost impossible to recover the lost $300,000 on his $20,000 a year fixed income. His dividend income may likely be cut as well as companies hold onto their cash for survival. The only thing this retiree can do is pray the market eventually goes up while cutting spending.

In 2022, I had a softball friend lose 17 years worth of savings because he bought Tesla stock on margin. He went all-in as a early education teacher. To recover his paper losses, he has to work 10 more years. Please don't buy stocks on margin.

How To Determine Appropriate Equity Exposure

After you have quantified your risk tolerance by assigning a Risk Tolerance Multiple = the number of months you need to work to make up for your potential bear market loss, take a look at this guide below.

My guide gives you an idea of what your Risk Tolerance Multiple is. It also gives you an idea of what your maximum equity exposure should be based on your risk tolerance. Solutions!

Risk Tolerance Guide For Equity Exposure by Financial Samurai

Don't risk more than 18 months worth of gross salary on your equity investments. This assumes a 35% average bear market decline in your public investment portfolio.

In other words, if you make $10,000 a month, the most you should risk is a $180,000 loss on a $514,285 pure equity portfolio. Follow the risk exposure formula as you make more money.

The Max Equity Exposure formula =  (Your Monthly Salary X 18) / 35%.

You can certainly have a larger overall public investment portfolio than $514,285 in this example, but I wouldn't risk much more than $514,285 in equities only if you have only a $10,000 a month gross salary.

You can have $514,285 max in equities plus $250,000 in AAA-rated municipal bonds if you wish, for a reasonable 67%/33% equities fixed income split. Your total portfolio size would therefore be $764,285.

Adjust The Assumptions As You See Fit To Measure Risk Tolerance

If you think the next bear market will only decline by 25%, feel free to use 25% in the Max Equity Exposure formula. In the above example, the result would be ($10,000 X 18) / 25% = $720,000 of maximum equity exposure for someone making $120,000 a year.

If you just got promoted and plan to see 20% YoY earnings growth for the next five years, you could use your current monthly salary and a higher Risk Tolerance Multiple to determine your equity exposure.

For example, let's say you currently make $10,000 a month, but expect to make $20,000 a month in five years, You also think stocks will go down by 25% at most. The calculation would therefore be: ($10,000 X 36) / 25% = $1,440,000 as your target or maximum equity exposure.

If you decide to live like a hermit in a low cost town in the middle of nowhere, you could increase your Risk Tolerance Multiple to 36. But you've got to question your money priorities for trying to make a bigger return only to never spend your rewards.

Add A Risk Tolerance Multiple Buffer

Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.

It is a judgment call regarding how much equity risk you should take. If you've quadrupled your net worth after a 9-year bull market, it's probably wise to lower your risk exposure multiple. Conversely, after a 30%+ correction in equities, it's probably wise to increase your risk exposure multiple.

The closer you get to retirement, the lower your multiple should be as well. Nobody wants to get close to the financially free finish line only to break a leg. The ambulance ride will be the most depressing ride ever!

Be A Rational Investor With Financial SEER

The valuation of everything is dependent on current and future earnings. It takes time and energy to create those earnings from your job or your business. If you are seriously burning out, please dial down risk and give yourself some time to heal.

For the average person in a normal economic cycle, a gross Risk Tolerance Multiple of 18 is my recommendation. Most people have the fortitude to waste up to around 2-3 years of their lives to gain back what they've lost from a bear market. But after three years of digging out of a hole, things start to feel hopeless. The average person starts giving up.

Remember, things could always be worse! Not only could your stock investments lose more than 35%, you could lose all your home equity due to leverage, your business, your job, and your spouse as well. Please invest rationally and responsibly.

I hope the Financial Samurai Equity Exposure Rule (SEER) helps you take the subjective term of risk tolerance and shapes it into something quantifiable. You now have a concrete way of determining your equity exposure and risk tolerance.

Financial SEER Formulas To Quantify Risk Tolerance:

Risk Tolerance = (Public Equity Exposure X Expected Percentage Decline) / Monthly Gross Income

Maximum Equity Exposure = (Your Monthly Salary X Risk Tolerance Multiple) / Expected Percentage Decline

The key point of Financial SEER is to help you quantify your risk tolerance by measuring how much TIME you will lose or are willing to spend to make up for your loses.

Wealth Building Recommendations

1) Quantify risk tolerance by tracking your finances like a hawk.

The more you can stay on top of your finances, the better you will optimize your finances. To do so, sign up for Empower, the web’s #1 free wealth management tool to get a better handle on your finances.

After you link all your accounts, use their Retirement Planning calculator. It pulls your real data to give you as pure an estimation of your financial future as possible. Definitely run your numbers to see how you’re doing. 

2) Invest in real estate for steadier returns and lower volatility

Diversifying into real estate is a great way to dampen investment portfolio volatility. Unlike stocks, real estate values provide utility and don't just plummet in value overnight.

Check out Fundrise, my favorite real estate crowdfunding platforms. Fundrise offers a way for all investors to diversify into real estate through private funds with just $10. Fundrise has been around since 2012 and manages over $3.3 billion for 500,000+ investors. 


In 2017, I reinvested $550,000 of my proceeds from a SF rental home sale into 18 commercial real estate properties. It's great to earn income passively and diversify away from my expensive San Francisco real estate holdings. Investing in heartland real estate is a long-term trend I don't want to miss.

Fundrise is a sponsor of Financial Samurai and Financial Samurai is an investor in a Fundrise fund.

Financial SEER And Quantifying Risk Tolerance is a FS original post. Join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. 

99 thoughts on “Financial SEER: A Way To Quantify Risk Tolerance And Determine Appropriate Equity Exposure”

  1. Does this:
    The Max Equity Exposure formula = (Your Monthly Salary X 18) / 35%
    in turn mean that in retirement (where monthly salary is 4%/12)n would be
    The Max Equity Exposure formula = ((4%/12) X 18) / 35%
    and therefore about 17% Max equity exposure? Or is the formula completely different for the retirement period?

  2. Pragmatically speaking, this is one of the most useful things you’ve written (for me). This isn’t to suggest that I haven’t benefited from much of your writing.

    I’ve been wrestling with the appropriate amount of equity exposure for a longtime, and could never quantify a formula. What you’ve suggested makes a tremendous amount of sense.

    I’ve also always wanted to be the person that buys when everyone else is selling. I think that part of the reason that I haven’t been able to pull the trigger at the appropriate time may be that I went into the decline with too much exposure to begin with, which then puts me into a state of paralysis when I actually should be buying. After several declines I do recall saying to myself “I should be buying right now, BUT I’VE ALREADY LOST SO MUCH!”. I could see where your formula may help me behaviorally act differently in the future. Thanks!

  3. A few things I’m trying to understand here.

    1) How should margin play into your equity allocation / SEER formula?
    2) When you say equity allocation, are you talking about liquid assets only?
    3) This ratio tends to imply massive equity portfolios for high earners ($810k annual gross cash comp) even though a large amount of that gets eaten up by taxes. What is the appropriate adjustment?


  4. Interesting concept. Currently I would be at a ~33, which I am fine with, as I am not depleting my investments and I love my work life balance. After I reached FI, I quit my day job and continued my consulting work, which I love. I also was offered a part-time job working at a small RIA, which I hadn’t banked on. So, in total, I work 20-25 hours a week, which is doing things I love when I see fit. I do realize though that my situation is very fortunate and that not everyone has this luxury. I also tend to be a high risk personality and have long believed in a high equity portfolio hedged with REITs. It also doesn’t hurt that my spouse loves working and has no plans to stop, either. I appreciate the formula, as it quantifies losses in a way I hadn’t thought. Keep up the great work, Sam!

  5. Hi Sam,
    I must be miss-understanding something. Let’s say you have a $5M portfolio, have a 60%/40% stock/bond allocation and make $200k/yr. This makes your equity exposure $3M, which is far higher than your top row in your SEER table (which I calculate to be a little more than $1.7M max equity exposure when extrapolating from your table). Typical investment advisors say a 60/40 split of stocks and bonds is a very sound allocation. This doesn’t jive with being even higher than your top level “Extreme” risk taker category.

  6. MacArthur Roth IRA wheeler

    A very good post for volatile times such as these. I’m at 8. Financially speaking Sleeping fairly well because the wife and I discussed our tolerance. Overall, Not sleeping well because people are getting ill from COVID19.

    We lagged the SP500 this past year by a decent amount but we were happy with our returns. We have been steady at about a 62/38 split.

    We have been through this before and anticipate another 20-25 valuation drop.

    Hope everyone stays on their risk tolerance course.

    More importantly, we anticipate a swift resolution for COVID19. No more fatalities please.

  7. I wrote a post called, “Will you have the money when you need it.” A commenter recommended this post of yours. Here was my reply and I’m wondering if you have thoughts on my question?

    “I agree with the tenant of that post that we overestimate our own actual risk tolerance. I certainly did in 2008. I thought I was broadly diversified and was prepared for financial cycles. When half my wealth evaporated I definitely felt that emotionally. After that experience, I think of myself as more ‘moderate risk.’

    That would imply a lower # on the SEER scale, right? But mine comes up 51 when I do the math from the first formula and that seems high. I didn’t know how to reconcile my reality with Samurai’s theory.”

    1. Well, with no further input from anyone I guess I’ll just go with my gut and keep my equity percent low. It usually runs at 30-40%. Minimal volatility but moderate growth. Seems to work for me. I felt no stress at the end of 2018 during the stock decline, yet my wealth continues to grow.

  8. The typical 67 yo with 20K SS and 20K on his 1M. Let’s say the portfolio is a 60/40 US stocks/US bonds his expected return is 9% and his risk is 9%. His WR is 2% he needs to do nothing. But if you want to do something have 3 yrs of needed income in a CD ladder, in this case $60,000. You can build the CD ladder over decades if you want it to be partially paid by interest by the time of retirement. 2500/yr @ 2% gets the job done. In up times extract 20K/yr and re-balance every year. This forces you to sell high a small% and store some wealth in bonds. In down times live off the CD’s and re-balance from bonds to stocks. This forces you to buy low. re-invest the CD interest back into CD’s if you don’t use them. This gives you 2 pools of risk, a high/er risk portfolio pool and a low risk CD pool. Both pools have growth. The thing that kills you is SORR. By owning 2 pools of risk you can close the portfolio off to SORR by not withdrawing and just re-balancing. You always sell what is up whether in a down or up period since it is the thing making money. In a down period you sell CD’s since they are “up” in a down period. You sell stocks in the normal up period since they are the thing up. In the crash you close the portfolio and sell bonds to buy stocks low. The risk tolerance is predetermined, the system is mechanical and disciplined and requires no swinging dick analysis. As you live your life you are heading to the grave so your longevity is constantly decreasing. The probability of making a mistake that manifests itself in running out of money before you die vanishes as you age. This is why bad SORR early is a killer, so just have a little portfolio insurance in the CD account to get you through. You sleep fine because you are not over leveraged and properly risked and you have alternatives. The thing that will screw you up is RMD, so figure out how to Roth convert the portion of your 1M that is TIRA. It will do 2 things keep you in a low tax bracket and allow you to vary from which account you pull money from. You owe the taxes anyway so pay em and be done with it. When you kick the bucket your wife will remain in a low bracket as well. Funding this means you will have to work a little longer. So what if it makes you and your wife bullet proof.

  9. This is an interesting model, however if you are in a high tax bracket (I expect many readers here are) you end up with strange results.

    “Remember, whatever your Risk Tolerance Multiple is, you will have to increase it by 1.2 – 3X to truly calculate how many more years you will need to work to recover from your bear market losses due to taxes and general living expenses.”

    Simplify things and change the guidance to something like

    The Max Equity Exposure formula = ((1-Your Effective Tax Rate) X (Your Monthly Salary) X 18) / 35%.

    For High Tax Bracket in High tax states you can say

    The Max Equity Exposure formula = ((55%) X (Your Monthly Salary) X 18) / 35%.

    1. I use gross precisely because every has different tax rates. Gross creates a more apples to apples comparison. If the guidance is gross, then it is consistently gross. And folks can adjust according to their own tax situations.

  10. Okay this was an interesting post. I would consider myself a moderate to conservative investor especially now that I am in retirement. Your risk tolerance level right now for me is about 44. I am 30% invested in equities right now, but by your assessment I should be half of that, and dial down to 15%. I dialed down last year from 40% to 30% which will generate a 10,000 tax bill, but I guess this year, I should take it further down.

  11. It’s an interesting way to look at the problem in isolation but one component worth considering from an asset allocation perspective is correlation.

    Are there other assets that go up when stocks go down? Bond prices generally move in the opposite direction, not always, but were a good hedge this time. 10yr treasury yields declined which increases the price on the bond.

    Maybe as a step 2 of the “rule” is consider the investible net worth vs the equity risk tolerance and switch to cash/CDs that increase your income denominator or to long term bonds that offset the decline percentage.

    1. Sure. You can only write so much in a post before it starts getting extremely long and losing readers.

      The key is to create an easy-to-understand message so readers take action. Otherwise, nobody does anything to help themselves.

      Any formula you want to propose for step 2? Think about a name and a formula and its purpose. It’s all about combining creativity with fundamentals and communication.

    2. 1/n. Just investing in multiple asset classes in equal parts should do the trick. Here’s a good write-up of a sample portfolio that would allow for up to a 5% perpetual withrawal rate due it’s low volatility.

      It’s not exciting to talk about but diversification a la modern portfolio theory works. It just helps to remember there are other asset classes beyond stocks and bonds.

      1. Great charting site!

        A nice simple portfolio diversification idea, i really like it.

        Sam – good points about avoiding over complexity and keeping it simple. The bond geek in me would want to adjust the stock/bond allocation by realized correlation between the two, and adjust as the duration of bonds change (different coupon levels will have different duration)- when a simpler approach would be to buy some bonds along with stocks when your equity risk limits are met at 100% equity

        I’ve seen some investment managers get overly technical on allocation. Risk/Vol based allocation until it stops working like in early 2018 where vol goes very low, the “rule” goes very high on notional and both bonds and stocks and wipes out a good amount of your portfolio.

  12. This a great article on how to manage risk and definitely gave me something to think about given recent market conditions. I have to agree with some of the other comments about risk appetite increasing with wealth. I don’t know many poor people chucking a few thousand on Bitcoin after it’s fallen so much just to see where it heads, but I know plenty with money who are.

  13. Ah very interesting. Just starting to get into investing, I think my risk tolerance might be too high, but I don’t know. I feel like I want to make up lost time since I am starting at “0” in my mid 30’s. But we have a decent income and are hoping to save 60% of our income every month. I’ll probably reference this article later in the year and see how I am feeling.

  14. Sam, in the bear market chart I’m not sure I follow the date format. What would be 16-Sep-29?

  15. I like this method, but I’m gonna put a twist on it for my own situation. I currently have a SEER of 40 counting just my W2 income. I currently save all of my W2 income and live of passive and some business income.

    However, equites only make up 25 percent of my total net worth so I’m gonna divide my SEER number by 4 since it’s only 1/4th of my net worth for a final score of 10.

    10 on your chart puts me on the moderately conservative side which is how I view my risk tolerance.

    I like this post, makes you think

    Thanks, Bill

      1. Madhu Gorla


        This is my first time emailing you but I have been reading your articles for several years. You are doing a great service to your readers by allowing us to think about the intricacies of personal finance-you should very proud! Dumb question-is SEER on after tax investments or includes IRA/529 money?

  16. I think this tool is probably more useful to people that are in/near the distribution phase of their financial life. I can see tool as a quick and dirty way to estimate sequential risk (or reverse dollar cost averaging).

    However, as an early 30s high earner with a net worth less than 3x annual salary I am still in the very early stage of my accumulation phase of retirement planning. My job is also fairly recession resistant so I am not likely to have a significant drop in income if we do have a recession. I am looking at the pull back as an opportunity buy assets on sale and take advantage of dollar cost averaging.

    My plan is to pinch my nose and continue to maintain my target asset allocation. Just like it was hard to buy fixed income investments when the stock market was going straight up, it maybe a challenge to keep purchasing equities when they fall below my target allocation. The only meaningful change I am making is to transition my real estate exposure from public reits to private opportunities since reits seem to move in lock step with other publicly traded equities

    I would like to know why you aren’t excited about getting to buy more assets on sale since it appears like you are still cash flow positive from FS and consulting work. Do you think it is because your net worth:income ratio is much higher?

    1. Cultured Commenting

      What’s the reason behind REIT if I may ask? What private opportunities are you considering?

      1. I think historically low interest rates and increasing levels of leverage have increased correlation between previously less correlated asset classes. Look at the performance of VNQ or SCHH and the S&P 500 over the past few years and see how they move in tandem. I am hoping the less liquid nature of private investments will reduce correlation with public equities.

        I am definitely giving up some diversification and liquidity in search of less correlated assets.

        So far, I own a cash flowing rental house, do some crowdfunding private note lending on peerstreet and have participated in a couple of apartment syndication deals. Ideally I’d also like to acquire some industrial, commercial and self-storage space, down the road so I can build a diversified RE portfolio.

    2. If your net worth is less than 3X your salary, what is your Equity Risk Tolerance Multiple and percent of your net worth in equities?

      I am excited to buy more assets. I’m diligently looking to buy a beach house in Hawaii or a larger house in San Francisco before the Uber/Lyft IPO lockups are done.

      It is exciting to see one house fall from about $4.6 – $4.8M in 2016, to potentially under $3.5M today. It is the house I want, and after 2.5 years of accumulating more wealth, I can’t believe it is still around and still the house I want.

      1. My ratio is less than 5 but it has more to do with my relatively high income compared public equity exposure rather than my asset allocation of investable assets. My ratio is denominator driven since I am so early in my working career.

        I imagine your ratio is probably more driven by your asset allocation or numerator of your ratio.

        1. With a multiple of only 5, then you should definitely be excited in investing in more risk assets until you get to about 18. As you build up your equity portfolio, you should do some self-reflecting after each new multiple is achieved to assess how you feel.

          I’m trying to think back to when I was a young gun.

          At 24, I made around $5,000 a month + bonus. I had about $170,000 in equities after one stock did really well. So my Risk Tolerance Multiple was 80 – 97, but I just started my career too.

          I felt my exposure was way too high so I sold everything. This was around the dotcom bubble. I bought SF real estate instead. After the dotcom collapse, I’ve never breached a 36 multiple b/c I was busy building my wealth through SF real estate.

  17. Cultured Commenting

    This is a good way to think about it. I think you are right, risk tolerance should decrease around FIRE levels, no matter the age. Now that I’m thinking about I could see it figuratively as an parabolic function, with the minimum point at your FIRE number: risk tolerance lowest at your FIRE level, and increasing if you’re under/above (but at different rates on each side of the curve): for example if you stand at 2xFIRE level you can take a 50% hit without changes in your lifestyle.

    I think this is one of your best articles and would like to see more of those: risk tolerance, financial planning, investing and diversification, etc. Especially with the current incertainty in the markets.

    1. I reached my FIRE level in 2012 with $80,000/year in passive income + a severance + some blog income. On a passive income front, I’m almost 3X higher now.

      I can unequivocally tell you that my risk tolerance has not gone up. It has declined because I’ve experienced how awesome it is to be free for almost 7 years and I never want to go back to being told what to do again. I want to protect the money that was made since 2012 at all costs.

      Every new dollar feels like gravy now. But it STILL hurts to lose gravy. Doing the math, earning a 4% lower risk rate of return this year is like earning a 12% rate of return in 2012 to equal the same absolute dollar return. That is good enough.

      But again, everyone is different. And you won’t know until you get there.

      1. Sam, I think one way of looking at it is, you already got “rich” once you don’t need to do it again. At this point losses are more painful than missing out on gains.

  18. Honestly I believe it’s a bit more complex then that equation. I’m hovering around 40 by your math. I haven’t changed my allocation in nearly 15 years. I still have twenty years till retirement to my plan or 28 according to the normal so I also don’t intend to change it. It’s a deeply personal question, some people are just wired to be ok for more risk then others.

    As I get closer to retirement I can see a shift towards safer assets. But that’s a matter of time horizon as risk mitigation. I can deal with working forty more months to return to this point should things never recover. I can’t deal with not having enough at retirement. My risk tolerance is hence a function of my years to recover the loss with savings.

    1. Cultured Commenting


      Maybe we could consider portfolio value * portfolio annual volatility / net yearly income?

    2. For sure. 20 years is an eternity, so you’re free to be more aggressive. I’m assuming your salary will increase as well, so in 5-10 years, your forward multiple is actually much lower.

      At 22, I had an 18 year time horizon b/c I wanted to leave work at 40.

      It is great you have the desire and willingness to work 20 more years. I tired out after just 13 years.

  19. I am registering at a 17…1.45M in equities relative to a 30Kish monthly income…I am in early 30’s…This was the first meaningful move to the downside since accumulating resources…I have approx. 77%ish of my NW in equities and have backed up by about 200K since October. The move severely impacted my mood…I still don’t think I’m going to dial back any exposure as I won’t be touching these funds for quite some time. Despite saving 6 figures every year, my NW seems to fluctuate more based on my investments…Was painful to see my NW go down last year on an aggregate basis despite saving over $150K. What can ya do! Open to any feedback!

    1. Yeah, it sucks to lose $200K if you spend a year grinding to save 150K.

      Folks need to put their losses in real work months to see viscerally feel risk.

      But at 17, and in your early 30s, you’ve still got a long way to go, so keep on saving and investing as usual I say. But if you see yourself not wanting to work within 5 years, then I would dial down the multiple to 12 or lower.

      You can afford to work for many more years to make up your losses. Older folks can’t. And I don’t want to b/c I want to take care of my boy.

    2. Use options to manage your equity risks. That is my 2 cents. You don’t need black-belt level of options skill to reduce the risks. I am amazed and disappointed nobody in this and any other sites discuss this type of risk management for retirees or FIRE people. Appropriate asset allocation (99.99% of the financial advisors’ strategies) is one way to plan for market down turn. Even with the right asset allocation, nobody talks about what you should do when your equity portion of your portfolio takes on the chin or gets punched on the face, when the market corrects or goes into a bear market. Furthermore, nobody bothers to juice up more incomes from the bond portfolio than what the coupon yields provide.

      It is disappointing for me to see so many so called financial experts miss a very under utilized and yet useful financial instruments. Go figure!

      1. I’d love to have you write a guest post and shed some light on options to reduce risk and improve returns.

        Don’t be disappointed, take action to help make a change. If you can write your guest post using various different scenarios and such, that would be great.

        You can also tell your financial story. Shoot me an e-mail. Thanks for contributing.

  20. Unless you’re already retired and withdrawing from your portfolio, wouldn’t the maximum recovery time just be the time it takes for the market to bounce back in real terms (say 2-5 years)?

    If you are planning to retire soon, it might make sense to adjust your planned initial withdraw rate according to something like the Shiller PE Ratio:

    So, if you’re retiring at the top of a bull market, maybe a 3% withdraw rate is more appropriate (to account for lower likely forward returns) but in a down market it might get adjusted up to 4%. If you make these adjustments, your planned retirement income might not fluctuate as much as the market would indicate. It also prevents you from thinking you can inflate your retirement lifestyle when retiring in a bull market. There’s a study that correlates safe withdraw rates to the current Shiller PE ratio but I can’t seem to find it.

  21. Mmmm…unrealized losses are just that. Unrealized. If the market recovers on average in 10 months and your time horizon is 10 years then the best thing to do is stay the course.

    Are we in a Japanese multi-decade stagnation scenario? Doubtful. When they popped their PE ratio was around 60 and they had a huge real estate bubble at that same time. The risk was highest in 2008 for us to do that.

    Historically the S&P has been down two or more consecutive years only 4 times since 1929.

    1929-1932 Great Depression
    1939-1941 WWII
    1973-1974 Oil Embargo
    2000-2002 9/11

    Will 2018-2019 be #5 and caused by trade wars, Brexit and central banks? Maybe. But these look weaker than previous causes unless one of these pressures triggers something really bad in 2019.

    I’ll risk it…and my SEER number is quite high. Especially since it ignores total net worth and time horizon as part of the equation.

    The biggest message should be “don’t try to time markets”. Making a significant rebalance today because you’re nervous is generally a bad move.

    1. True, but eventually one must spend or give away their money because life will end.

      Financial SEER isn’t telling people to “make a significant rebalance today.” It is helping people assess their risk tolerance and appropriate equity exposure because way too many people have no idea.

      What’s your story?

      1. My story is that I have enough to be FI (lean to moderate FI) but like my job enough to stay working. So I’ll keep accumulating for an end goal of a dynasty trust or llc for a bid toward creating multigenerational wealth.

        So it will be interesting to learn how to structure an entity with both flexibility and protection as well as see if I can actually save enough to make that a reality on a middle class income.

        That is “giving it away” but I’m building it for fun and personal satisfaction.

        It’s interesting because looking at my extended family some distant branches that have owned the same house for 3+ generations in CA. Houses that I don’t believe that some of the current generation could afford those homes on their incomes.

        So I’d like to create that kind of lasting benefit without the physical house part.

        Why not? Like you said, you can’t take it with you anyway.

        1. If you are lean to moderate FI, you’re not really FI, especially when you say you like your job. I’ve seen it before. That’s just code for making yourself feel better about your situation. Thinking about creation a dynasty trust is delusional at your stage in life. Focus on taking care of your family first.

  22. My family hit the standard “25x living expenses” a few years ago, but I’ve always known I wouldn’t feel comfortable leaving the workforce for good until we went through another bear market and made it out on the other side. So I’m working in a low stress, low pay job to cover expenses while we’re loaded up on equities (no bonds or CDs here). We also bought a more expensive house in Seattle because we believe in long term price appreciation there (same with SF but we’re priced out there). I’m actually hoping the current market downturn gets worse because right now it doesn’t feel like a “real” bear market and until we get through that I’ll always feel the need to keep working.

  23. Simple Money Man

    I use the 100 minus your age (e.g. 100-30 = 70% in equity) formula. But I will test out this SEER one too, thanks!

    Seer reminds me of the Last Kingdom – viking show on Netflix!

  24. Let’s look at it this way.

    A person with a billion dollars cash can most likely afford to lose 40%. After all, the person still has $600,000,000 remaining. For a person with $10,000 losing 40% is most likely going to be tougher. There is much less left because there was much less to begin with.

    Things vary by age and time to death or retirement; however, in general, the more a person has the more reason the person has for a higher risk tolerance.

    Note the distinction — having more reason for a higher risk tolerance does not mean a person will have higher risk tolerance.

    Actual risk tolerance is highly personal and highly variable. I rarely see actual risk tolerance arrived at logically. Most people have a lower risk tolerance than they should.

    1. Sounds good. Is that what you’ve noticed as you’ve aged and grown wealthier? How has the percentage shift of your net worth to risk assets changed over time? How would you quantify risk tolerance, if not for Financial SEER?

      1. It’s not so much risk at this stage as maintaining the value of my retirement accounts. I have as little in equities as I think I need to have more in the accounts at the end of a year than I had at the end of the previous year.

        The picture changes as I am forced each year to withdraw a larger percentage from the accounts and in a little more equity may be indicated. I count part of my success to being almost completely OUT of the market by the time things started to go south in the last recession.

        Since I do not see a bear market, I actually added to my positions at the end of last week. I am still pretty risk-averse by most measures, as I always plan to be OK if I lose a third of the value of my equity investments.

  25. Now I want to SEAR a steak for breakfast. I got some eggs…

    More importantly, I plugged the numbers and realized I’m now extremely UNDERWEIGHT in equities. I experienced a recent event which required me to forgo a large percentage of my equity portfolio. It’s rebuilding time.

    Combining with CDs and additional exposure to Fundrise, I’ve been allocating new capital AWAY from equities. With this formula as one of many reference points and an anticipated decline in equities on the horizon, I’m going to be ramping up new capital toward equities.

    – Mike

  26. kenneth tobin

    Wait till you near retirement and learn SEQUENCE OF RISK and MARGINAL UTILITY OF WEALTH
    you get more CONSERVATIVE

    1. I don’t think folks who only been investing since 2009 will ever be conservative until they experience a downturn.

      And frankly, that’s fine. People need to learn through experience.

      Even though I’m more conservative now than last year, my absolute dollar exposure is still much, much higher than my 20s and 30s. Just got to get used to these larger absolute dollar things and think in percentages.

  27. Certainly a timely post. Your methodology for calculating what an average risk-tolerant person should have invested in public equities results in some actionable advice. You use sound assumptions and lay out a convincing case for right-sizing your risk appetite during volatile times.

    After all, if you’ve earned considerable investment returns over the past decade, why shouldn’t you ring the register and take some risk off the table? You’ve earned these returns and you should be able to enjoy them in a way you see fit. You shouldn’t allow the bear market to claw them away if you can avoid it. Using your SEER measurement is a great tool to protect against this by quantifying your risk tolerance and making wise decisions based on the results.

  28. This SEER formula is a great concept and and a smart way to assess risk tolerance by correlating it with how many years are you willing to work more if hit with losses from a bear market.

    Even though I have invested before 2009, the amount of money at play now makes the losses even more pronounced with less of a market decline so far. I have lost more money during this current decline than the total amount invested I had in the mid 2000s.

    1. That’s the crazy thing. I experienced similar type of absolute losses in 4Q2018 that were much more than the last global financial crisis losses. But percentage wise, it was obviously much smaller.

      I don’t like losing money, so my plan is to not lose money. Especially not after such a huge run. Every dollar feels like free money now. Don’t want to get too greedy.

      1. Tripplefiguy

        “I don’t like losing money, so my plan is to not lose money.”

        I think you’ve summed up your whole post right there. This colors your whole investment perspective going forward and puts you into the conservative camp. It seems to me that you could grow your assets considerably more over the long term if you one day decided to accept more risk. I think you even have the potential to get over $100 Mil net worth. I think you may be a little too conservative given your work ethic and ability to create wealth on your own. You even stated that your estate lawyer said you’d end up with too much money at your current spending levels. Instead of dialing up spending, which you said you might have a hard time doing, why don’t you dial up your risk?

        1. Maybe. Everybody is open to interpretation. Some might say I’m a high risk guy for leaving work at 34 with only $80,000/year in passive income at the time. During the month of December 2018, I traded about $2M in and out of securities (100% of my house fund portfolio) to try and get my House Sale Fund to outperform. I wasn’t going to just sit there like a zombie when volatility spiked. Thankfully, it closed up 5.8% in 2018 vs. -6.4% for the S&P 500.

          But instead of focusing on me, which doesn’t help you, how about about you? How old are you and where are you on your financial journey.

          Financial SEER is meant for all.

          1. Tripplefiguy

            Yes I agree. I think it comes down to what everyone’s goals are and what their spending requirements are. $80,000 in passive income and I would feel incredibly wealthy being almost 3 times my annual expenses. It’s all relative.

            I generally don’t talk much about myself. I guess I’m like you in that I like/want to help people. I read many of articles on your blog and have lot of respect for you.

            I’m 32 years old living in the Pacific Northwest, am married and a new father like yourself. My son’s birthday is also in April like yours but he’s a year younger. (I got a kick out of your pics of cutting up little pads to pad your whole house :) ) I’m relatively just starting my financial journey, just starting to really save and invest about 3 years ago. Currently, I am working on starting a business of financial coaching and building a website/blog so keep an eye out in the near future ;)

            1. Congrats on your son! Enjoy hime as much as you can. Boy do they grow up quick. I just want to bottle him up at every life stage and relive the memories.

              Easiest way to success is to continue. How can you fail if you keep on going right?

          2. I agree (and not just because you are the FS!)
            I’ve thought a lot about this: which would I rather, earn 4% a year on the entire portfolio including CD/cash for 2-3 years, then 8-10% a year after that because after a dip in equities I raise my allocation. Or would I like 7-7.5% a year and just leave my allocation 70-30.
            Personally I’ve decided to do the former and it means if the market corrects I will constantly outperform and have enough ammo to pickup mispriced assets. I’m prepared during major market distress to go 100% equities . Now is not the time for me even though I’m only 32 and 5-8 years away from Fire.

    2. I am literally in the exact same boat. I had comparatively little to lose in the last bear market, and lost more than I had then in this pull back.

      What we are doing now is to take some money out of our investments and to pay down our mortgage in the neighborhood of 1/3 to 45% of our remaining balance. Our non retirement investments are about as much as our remaining mortgage excluding our large, 1 year’s worth, emergency fund. The emergency fun is mostly high yield savings and I bonds. There is a chunk of that in T-Bills but you can’t beat the I-bonds for the tax benefits, even if it’s just $10k per year per person. Still, over time, that can add up. Anyway, trading equity for real estate, our mortgage, seems wise at this point.

  29. My risk level is over 50 by this calculation but I didn’t feel very worried by the 20% decline we just had and actually in December I had a positive return in Australian Dollar terms because the Australian Dollar fell balancing losses in international stock markets. The Australian market was flat for December. So, I think diversification across markets, asset classes, and currencies is important. If you do this well, you can have a larger exposure to equities per se for a given level of portfolio volatility and hence a higher Sharpe ratio… It doesn’t really matter if you are losing in US equities if other things in your portfolio are gaining.

      1. Diving For Coins

        From what I’ve read, the banks were told to cut down on interest only loans. The government also launched a Royal Commission to investigate bad behavior in the financial services industry, so the banks are being careful.

        Also China has slowed down which probably hasn’t helped matters.

      2. Yes they are down but here in Canberra and other smaller cities prices are up 5% over the last year. Some of the reasons for the decline in Sydney/Melbourne:
        1. Prices just overshot to the upside maybe…
        2. More restrictions on foreign investors
        3. More restrictions in China on investing overseas
        4. Tighter lending standards at Australian banks
        5. Labor likely to win next election and have policies to reduce deductibility of investment mortgage interest and increase capital gains rate among other tax increases…

  30. Good stuff, love the acronym. I’m very comfortable with my asset allocation and my ability to whether any storm. This ain’t my first rodeo. I’m older now but have my allocation set appropriately.

  31. David Huston

    Great article – I was really keen to hear more views regarding allocation a few months back and you’ve done a great job in recent posts delivering that!
    One factor to consider: I’m about 40/60 now on a fairly substantial portfolio (c1.8mn) and pretty well balanced. However I’m now thinking of ‘turning off the tap’ and instead using my monthly deposits to pay down mortgage and invest in Real Estate Crowdfunding. I wonder if what you’re suggesting is – for die hard equity and bond savers who have been doing this for many years – we need to rebalance and then consider investing our monthly earnings elsewhere to diversify. I mean as you’ve said in other posts I can just start gobbling up CD / high interest savings while I wait :) The reality is I think a lot of people have high equity allocation because they invest ‘regular and often’ every month

    1. I like real estate crowdfunding especially for richer folks who live in more expensive parts of the country. It’s good to diversify away from expensive locations and arbitrage the opportunity.

      But if you’re already living in Austin or Mobile, then REC is less appealing. But when the full real estate cycle on the coasts plays out (maybe 1-3 more years), then getting coastal city exposure might make sense.

      I love myself a 2.45% yielding money market account right now!

      1. Tripplefiguy

        I’m curious as to why the mm account at 2.45% instead of short term treasuries which are close to the same with no state tax?

          1. Tripplefiguy

            Yes, I have a relatively low net worth with about 10% investable assets in a high yield saving account. I’m just trying to understand why someone wouldn’t put idle cash in short term treasuries if living in a high tax state as I do. The reason I don’t have any is because my cash pile is so small that the small increase wouldn’t matter much. But if I had a large sum, it makes sense to have treasuries. I’m curious, what is the risk with short term treasuries? I thought they are pretty much rock solid?

  32. “You might also erroneously think that the richer you get, the higher your risk tolerance. […] This is a fallacy”

    I disagree with this.

    If you look at the very wealthy, they tend to be overweight equities or equity-like investments.

    And they won’t be well diversified either.

    For them, a 50% decline in prices won’t affect their lifestyle, so it becomes a game.

    What would you do if you won a $50 million dollar lottery?

    I’d probably spend $5 million on residences, keep $5 million in CDs and cash, and put the remaining $40 million in equities, real estate, businesses, or charities.

    In other words, 90% equities or equity-like vehicles.

    1. I agree with you. My SEER multiple is at 256+. It seems that my risk level is off the charts high, but I’m also holding 30 years of living expenses in cash. I don’t really care what the stock market does in the next few years.

      I’d think anyone investing for retirement would have a high SEER multiple before they retire. Otherwise you will be underinvested and will be hardpressed to keep up with inflation. With a SEER at 24, you’d only have around 6 years of income invested in equities. How do you keep up with inflation like that?

      1. But aren’t you the outlier who comes to comment how extraordinary rich you are on almost every single investment related post on FS?

        Seriously, it gets nauseating how much you brag about your finances. Is it possible to stop and think about regular people for once?

        I see you on other websites talking about how rich you are as well. You need to put things in perspective and work on your self-esteem buddy.

        1. I don’t consider myself rich, so you probably have the wrong guy. I read FIRE blogs to build up confidence in what I feel is a very risky move to retire early without a massive nest egg. Don’t just devour FIRE content, you have to question the ideas presented.

          But let’s stick to the main point. Sam is advocating a SEER of 12 if you’re within 5 years of retirement. So if your working income is $120k a year, that means you have $342k invested in the stock market. Who is going to survive making an annual 4% withdrawal on $342k when you were living on $120k of income per year? You need a much higher SEER if you’re thinking of early retirement, unless you are invested in even riskier asset classes than the stock market, have a pension, have a huge real estate portfolio, or still work in retirement. Sam can keep his SEER low because his active income is amazing and many multiples of most professions.

          1. I don’t think the money just disappears when you reduce your equity weighting. It turns into fixed income in this case or something else more secure that provides income.

            I wonder if this is hard for people to realize and worth clarifying.

            FYI, just read your past comments. It’s all about how rich you are. Perhaps try giving your money away to help the less fortunate instead of always bragging.

            1. Fixed income is not going to provide you enough return for a long retirement, unless you have many, many years of expenses saved in it. What magical asset class are you thinking of that can provide secure stable income that outpaces real inflation (tuition for your kids, medical premiums and expenses for your family)? Please share.

              I am guessing RootOfGood, who actually lives off mostly passive income in a LCOL region, has a SEER of ~80.

              You have no idea how much I gave away and am giving away, why judge? I can also guess from your comments that you don’t have many people depending on you which makes you think you are on track to FIRE in 10 years, and also makes you confuse me with someone who is rich.

          2. True, I shouldn’t judge. I’m just asking you to tone it down regarding your Wealth because it’s not really helpful to anybody by saying I have millions of dollars and how you make and lose hundreds of thousands of dollars a day and stuff like that.

            I just read the Root of good 2018 update. He lives in a not very nice area of the country and lost more than 3X his annual expenses in the market in 2018.

            That is not the lifestyle I want to live, nor is that the financial guidance I want to follow. Are you kidding me? Losing more than three years or living expenses in the stock market is irresponsible!

            Further, I want to live a healthier lifestyle as well. There’s no use being wealthy if you’re unhealthy.

            1. I’m just making the point that if you are trying to make a decent return on a passive investment, you have to be able to stomach volatility. If you want to FIRE to a HCOL area and enjoy a 100k per year lifestyle (which is pretty basic in a HCOL as Sam has demonstrated in a few articles), you need to make 150k+ in pre-tax passive income. If you’re invested in 3% safe CDs, you’d need a 5M+ portfolio to not spend it down, and that doesn’t even keep up with inflation much less all the big life changes ahead of you in a FIRE lifestyle.

      1. Nope, far from it. But I’ve met people who are.

        To me, being very wealthy is never having to worry about money — a 50% fall in net worth has zero life impact.

        So I guess I was referring more to ultra high net worth individuals than “just” high net worth (HNW) ones.

        That first link focused more on HNW ($3 million+).

        I like that chart in the second link on Asset Allocation by Net Worth. It appears to suggest that UHNW people have a low weighting in fixed income.

        How would you allocate a $50 million after-tax, after-charitable-donations lottery win?

        1. Got it. I guess it’s fine to pontificate how to feel as an UHNW individual and what you would do if you were a UHNW individual.

          Can you give us an idea of your age and where you are on your financial journey so we can have some perspective.

  33. I’m sitting on a risk tolerance multiple of 40 so my risk level is extreme+.

    Strangely though in the past market carnage I’ve actually been pretty calm, as the way I see it, as long as I’m working and investing, cheaper buying prices are working in my favor.

    Once I FIRE though I don’t think I’d feel the same, hence why I’m aiming for a lower than average withdrawal rate.

      1. No specific date. I’m FI at the moment, but recently began loving my job and I’d also like to take advantage of the current discount in the market. I’d probably say max 5 years time when I’ll be 45.

        Weirdly I’m actually really hoping for a big bear market!

  34. By my reasoning, anyone accumulating assets (aka working and saving) and will be for the next 5 years or longer should be heavy on equities, period, independent of the total value of your portfolio. Otherwise, figure out what you plan to withdrawal in the next five years and keep that value in cash / bonds, and everything else in equities.

    Rough train of thought: the majority of bear market recoveries happen in 2-3 years, so planning for the market to fully recover in 5 years is safe.

    I don’t understand the logic of the SEER approach – with a long time horizon for withdrawals, why are portfolio value and income rate important?

    Also seems like savings rate should be part of the formula too.

    1. It’s hard to understand risk if you’re young and/or don’t have much money. The problem I see is that every 35 and under investor thinks they are an investing genius since they started after 2009.

      What’s your case? And are you financially independent?

      How would you quantify risk tolerance if not through work months?

      1. For one thing, I think time horizon for withdrawals is important. Especially with 401k and other accounts that you can’t touch til 59.5.

        My reasoning is based on evidence (I can find sources if needed), with the intent to take the emotion out of the decision. I lost my job in the 2001 bear market and lost a good chunk of 401k in the 2008 bear market. I’ve got another 10 years of working, so I have a big risk tolerance and wouldn’t want to miss any gains from the non-bear markets.

        1. You gotta do what’s right for you.

          It’s great you are still so aggressive after losing your job in 2001 and losing a lot in your 401k in 2008.

          The question to help quantify your risk tolerance is: What if you had to work another 15 – 20 years instead of another 10 years. Would you be OK with that if another downturn hits?

          You seem like a man willing to work for a very long time, so it’s probably fine for you to take max risk.

      2. Not sure if you have a Seeking Alpha account, but you should take a look at Lance Roberts’ series “The Myths of Stocks for the Long Run.” 11 parts. I learned so much, I printed them out and put them in a 3-ring binder for another round of reading.

    2. Tell people in Japan about that :) Even historically in the US full recovery in real terms can take a lot longer than 5 years.

        1. safety dance

          Actually it’s not about working but just pretending to be busy until one can save face by leaving after the boss.

    3. Safety Dance

      Where are people getting this 2-3 year recovery stuff? Bears can last decades in real terms. They just look like they’re treading water on a nominal basis, but CPI is killing the equities on a real basis.

  35. SEER – I like it! Timely post. It’s been crazy in the markets lately and the volatility has had me thinking about my portfolio allocation. Overall I feel pretty good about my equity exposure. Even though I’ve lost money, my allocation isn’t too overly weighted in equities and I don’t have any short-term plans to liquidate which helps me sleep at night. I really started increasing my exposure to bonds over the last couple years, which I’m happy about. I also have kept some cash on hand this year so I can leg in when I see opportunities and have just patiently sat tight with the rest.

Leave a Comment

Your email address will not be published. Required fields are marked *