Episode 26: Risky Business
In this podcast we take a look at the often misunderstood area in personal finance – attitude to risk. Join Chris, David and Producer Tommo as they discuss the problems with traditional risk assessment tools and an over reliance on the results they produce. They also offer some practical tips to takeaway – from the best practice to expect from a financial adviser to understanding your own attitude to your money and risk. As ever we have some #tightasstommo tips, any tips you have for a future episode let us know on twitter through @finwellbeing.
0:50 – What has Chris been up to?
1:45 – Wellbeing Word from around the world
Netherlands – Gezellig (heh-SELL-ick)
2:40 – Tight Ass Tommo
We talk date night, toothfairy and reusable water bottles
#tipoftheweek – The Sharing Economy and recycling old magazines
6:00 – Introduction to the podcast topic, understanding our approach to risk
8:00 – ATR, attitude to risk. A questionnaire that should just be the start of discussions about risk
10:00 – The level of risk you are happy with translates to how your money is managed
11:00 – This ATR test leads to people having a higher level of risk than their actions would show they are comfortable with.
13:00 – Many regulators have come to the same conclusion
13:50 – Why are we making this statement?
14:00 – Framing of questions
15:50 – Unable to predict our future
17:10 – Present Bias and an example
19:00 – How do we react to positive and negative situations
19:50 – Loss Aversion, we react more strongly to loss compared to gains
21:00 – Questions are open to interpretation
22:00 – We need to be wary of the results from this ATR questionnaire, so what can we do to work out what our attitude to risk should be?
21:00 – Know Thyself
22:40 – Understand your capacity for loss
24.30 – Cashflow Forecast
25:10 – Practical tips to take away
27:20 – Understanding the way the markets work, your attitude to risk and the relationship needed with your financial adviser.
Click to Tweet – What can we do to work out what our attitude to financial risk should be?