Risky Business: You May Not be as Daring as You Think
I thought I was through with exams when I finished college. Then my financial adviser (a.k.a. stockbroker) had me take a test to measure my tolerance for risk. He said, there were no right or wrong answers, but I knew better. Once I had taken a personality test when I was in career transition (a.k.a. unemployed). My counselor had said the same thing, "There is no right or?," but when he told me my score he noted it was on the edge of the bell curve - the wrong edge. My need for acceptance by others was high; so high that I could not confront a taxi driver who gave me zero change from a $10 bill, on a $4.50 fare. I was very leery of taking this "risk-tolerance profile." As I expected the questions showed that I was a total "wuss." (In Pittsburgh, if you're 15 and a guy it means you always cover your ears in winter). A typical question; if your portfolio dropped 21.8 percent in one year, would you: a. Sell all your equities? b. Sell 1/3 of your equities and buy intermediate-term, tax-free municipals? c. No change, staying the course? I selected 'c' not because I believed in my strategy but out of total fear. And yet deep down, when it came to the important things in life I felt that I was a risk-taker. I could be as much a risk-taker as an F-16 fighter pilot or a New York City undercover cop. However, no test ever asked the real important questions of life, the kind of questions that affected my daily reality. Questions like: You have to drive to the airport. You get in your car, turn on the engine, and the gas gauge is on "E." Do you: a) immediately fill up, b) drive to the airport but don't put on the air conditioning, or c) drive back and forth without ever looking at the gas gauge again. OK, now lets add some real risk to the above question. What is your answer assuming your spouse is in the car with you? Now let's deal with food instead of hedge funds. For example, for breakfast you like your bagels dark but definitely not burned. You've just put a bagel in the toaster, and it is just not dark enough. You put it in the toaster again, just nudging the dial to the optimum position, taking into consideration the heat already generated and the level of darkness around the edges of the bagel. As you wait for your bagel, do you: a) stand there staring at the bagel, b) let the dog out, c) get your newspaper from the driveway and check the Knicks score. How would your answer change if it were your last bagel? Now lets deal with the most risky part of life - relationships: Its 11:30 p.m., Thanksgiving Eve; your wife is exhausted, having cooked the 24-pound turkey and the rest of the food. She asks you to place the turkey in the fridge in the basement. She reminds you of last year's fiasco when you forgot to refrigerate the bird. Do you: a) do it immediately; run upstairs to report to her that you completed the task. You then return to the basement to ensure that you have closed the fridge door, b) leave a note for your teenage son to do it when he comes in after midnight. Now for extra credit. You get a call from your high-school sweetheart. She asks to meet you for coffee in an hour. Do you: a) decline and tell you wife about the call, b) decline and not tell you wife about the call, c) ask your son if you can borrow his mousse. You get the idea. On this kind of test, I would score very high. I figure once I fine-tune my questions, I could use this kind of questionnaire to screen professionals trying to give me advice. For example, my internist wants me to come in to review the results of my prostate exam and to discuss the different options and the risks involved with each course of action. I may surprise him and ask him to complete my questionnaire first. I want to see what kind of risk-taker he is. P.S. My stockbroker just took my exam. He failed. I am looking for a new broker. Any recommendations? Hesh Reinfeld writes a syndicated business humor column. You can read additional examples of his columns on his website: http://www.heshreinfeld.com Or contact him at hesh1@comcast.net
Related News
The week's top Personal Finance stories - MarketWatch
The week's top Personal Finance storiesMarketWatch -Sep 6, 2008By MarketWatch In case you missed them, here are the top 10 Personal Finance stories from MarketWatch for the week of Sept. 1-5: As investors, they fly solo ... |
Personal Finance: Leaving a detailed legacy for the living - The Daily Advertiser
More Personal Finance Daily stories - MarketWatch
More Personal Finance Daily storiesMarketWatch -Sep 3, 2008Gee, you mean I shouldn't treat unrealized profits as actual profits, thereby exacting real moentary value from an asset that has yet to transfer? ... |
Personal Finance: Ask bank questions when depositing foreign currency - Sacramento Bee
Bill Mandating Personal Finance Passes LeadAR General Assembly - PR Web (press release)
The Beauty in Women's Wealth - American Chronicle
The Beauty in Women's WealthAmerican Chronicle, CA -11 hours agoThis authentic woman has written five New York Times best sellers; has produced five PBS Specials; writes for "O" magazine, Yahoo and Personal Finance. ... |
Personal finance chat with Dan Galli - Boston Globe
Personal finance chat with Dan GalliBoston Globe, United States -Sep 2, 2008Personal finance is challenging enough. Dan_Galli: Well, we have come to the end of another quick hour. I sincerely appreciated the opportunity to talk with ... |
7 Deadly Sins of Personal Finance - SavingAdvice.com
7 Deadly Sins of Personal FinanceSavingAdvice.com, WA -Sep 4, 2008The following list in reverse order details 7 deadly sins of personal finance illustrated with personal examples. These transgressions delay or possibly ... |
Mutual Funds & Personal Finance - Investor's Business Daily (subscription)
Mutual Funds & Personal FinanceInvestor's Business Daily (subscription) -Sep 5, 2008BY DONALD JAY KORN In the past year, the credit crunch has spread from mortgages to student loans and other types of debt. Home equity lines of credit have ... |
Compound Interest - Personal Finance Fundamentals - SavingAdvice.com
|
|
 |
|
|
RELATED ARTICLES
What Are We Teaching our 2005 Graduates about Money?
Now that we are in the month of June I can't help but wonder if we have prepared our new graduates for the responsibility of managing and budgeting their money.
Debt Management ? More Ways to Save on Gas Consumption
The price of gas continues to climb, and with continued uncertainty in the Middle East, they will probably continue to do so. In California and elsewhere, prices for some grades of gas have now reached the previously unthinkable three dollars a gallon. Granted, that is lower than the inflation-adjusted prices of early 1981, but that doesn't make anyone feel better when they've just paid nearly $100 to fill the tank of their sport utility vehicle.
How To Survive The Grocery Shopping Blues
If you are the normal consumer, then you've probably experienced the Grocery Shopping Blues. Most supermarkets use this trick to their advantage to squeeze more money out of their customers and turn a tidy little profit for themselves.
Organizing Your Finances - Thinking Outside the (Shoe) Box
If you're like most people, your personal financial records are most probably kept in less than "Good Accounting Practices" standards. For example, stashing old ATM receipts and hanging on to a stub showing what you paid for a pack of mints two years ago (cash, of course), might be filed with your paycheck stubs, credit card statements ? paid and unpaid alike ? as well as a few tax forms, a stray paper clip and a penny. Anything from an old shoebox to a toolbox would do you for this method of personal financial tracking but you can do better than that.
Budgeting Tips to Save Real Money
Sticking to a budget can be difficult, but with so many demands on your finances you have to be extra cautious. TV ads are constantly bombarding the airwaves with messages that you need to buy this or you must have that. Usually, if you just wait a week or two, the urge to buy that new gadget will pass. But, what should you do if you have already spent more than you have? The following are several real world ideas that can help you save real dollars.
Financial Readiness: Preparing for BRAC (Base Realignment And Closing)
The recommendations for military base closings have been released and the news is not good. If the recommendations are accepted, you will lose your job. So what do you do? Hope for the best, and prepare for the worst.
How to Obtain a Non ChexSystems Bank Account Without Being Scammed
Predatory lending exists in the mortgage industry. It's typically when a mortgage broker add's on unnecessary fee's to a bad credit application, because he or she knows that the applicant is in a desperate situation.
Planning Ahead with Your Finances
If you, like most people, have not seriously considered what steps you should take for planning your finances and are now planning on buying a house, getting married or having children, you will do well to read David Chilton's book 'The Wealthy Barber'.
Budgeting -- The Critical Flaw That Causes Most Budgets to Fail
Budgeting. It's a word we're all familiar with. Everyone knows what a budget is, right? Yet how many of us actually make and stick to a solid monthly budget? The truth is that most of us start out with the best of intentions, but an unexpected expense comes up and busts our budget. Then we give up and go back to juggling our finances and worrying about having too much month left at the end of the money. However, if you are striving to create a budget for the purpose of systematically paying off your debts, or to start a savings and investment program, then it's critical to develop a workable and realistic budget.
Help With My Annuity
The cries are heard from the distance, "I need help with my annuities." Nothing has changed...just a lonely senior who can't trust anybody with her annuity because every time she asks for advice, someone tries to make her invest in a different annuity...Sound familiar? Well you are not alone.
Strategies for Success
Holy Shenanigans! More STUFF?
A Quck Lesson in Saving Money
Did you have a piggy bank when you were a child? I did. Mine sat empty for a long time until my mother convinced me that I should really start putting my pennies and nickels into it in order to save my money for when I was older and wanted to buy something.
Budget Planning - Its Elementary My Dear Watson
Does it feel like you have to be Sherlock Holmes to solve the mystery behind balancing your personal budget? Are you living a mysterious thriller where your realization of "financial independence and security" is a vicious repeating cycle of debt? Don't be afraid?...Somehow you've ended up lost in the "plastic zone".
'
The "plastic zone" is a scary place. But you're not alone. There are millions of people today living the same mysterious life in the plastic zone. Remember green money? You know, that green paper with presidents proudly displayed on them. They have virtually disappeared from the "plastic zone." Is real Money a foreign object to you? Is the balance of your checking account mysteriously stuck at Zero? It's time to solve the mystery.
The Joys of Address Labels
Address labels are many things to many different people. If you are a huge fan of address labels, you aren't alone. If you are not a fan, you simply haven't yet realized the many benefits address labels carry. Address labels are quite simply a quick and efficient tool for creating a more convenient life.
Creating A Household Budget
Creating a budget can be a very difficult task. Although we as consumers know that we need to pay our bills, buy our necessities, and put money away for savings, we don't really know how to start.
Can You Afford Not To Look After Your Personal Finances?
Investing is a subject a lot of people don't want to think about. And there is good reason for that. Investing seems scary. It either sounds like something only the rich do or something that only a skilled professional can do. But the truth is that investing is something that everyone can and should do-as soon as possible.
The Benefits of Banking Online
How many drawers did you have to look through to find a bank statement the last time you needed one? Chances are you did not lay your hands on it as readily as you would have liked. If that is a familiar scenario in your home, help has arrived in the form of online banking. Even if you are among the most organized, online banking offers convenience you can't beat.
The World is Not Enough - Calling for a More Ethical Approach to Personal Finance
At a time when the entire world's attention is focused on the problems of world debt, with the Live 8 concerts, the G8 summit in Scotland, the Make Poverty History Campaign (MPH) and the various anti-poverty marches, it seems that everyone wants the world's governments to behave more ethically towards the manner in which international finance is conducted. This is obviously a laudable attitude to take, and has gained immense momentum with such a groundswell of public opinion that even the UK Chancellor, Gordon Brown, has stated he is planning to participate in the Make Poverty History demonstration in Edinburgh during the G8 summit.
Succession Planning
Have you ever thought about what you are going to leave your children when you pass from this earth? Wouldn't it be a great feeling to be able to give them a really good head start in life ? without actually spoiling them?
If I Had a Structured Settlement, I Would Use It to Pay for Gas
Has anyone been to the gas pumps lately? Soon $3 a gallon will be the asking price and we'll either have to become cyclists or create some additional income. I plan to do both of course because you can balance thrift and greed pretty well as you ride your bike to work.
|