Investment risk: It’s personal

“That’s too risky!” our clients may exclaim regarding a potential investment strategy. But what does risk really mean to you? The answer depends on your personal circumstances, time horizon and goals. Keep in mind that investment return is one way of measuring investment risk. So while we all have to take risk to achieve returns, what entails the right risks for you may be completely different for someone else. 

Some examples of how personal circumstances impact risk are:

  • Ongoing cash flow needs:  If you are past the wealth accumulation stage, generating cash flow to maintain your lifestyle may be your primary concern. As a result, fluctuating income may be the primary risk that impacts you. Consequently, you may be more willing to take on necessary but prudently chosen credit or maturity risk in order to preserve yield. 
  • Long-term wealth accumulation goals: You may have a long-term goal of leaving a substantial gift to a cherished cause and may not need personal access to these funds for the foreseeable future. In this case, it may be appropriate to allocate part of your portfolio to private equity investments that have low liquidity and a wide range of possible outcomes, but could have significantly higher potential for growth.


These are just two examples of circumstances our clients experience. KF Advisors understands that our clients typically have multiple goals, each with a different ability to accept risk to achieve the desired returns.  Our mission is to help our clients determine what they wish to accomplish with their wealth, understand the risk implications and develop a plan to help achieve their objectives. Helping you manage risk is one of the best ways we can help you manage your financial life.


The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personal investment advice. KF Advisors is neither a law firm nor accounting firm, and no portion of its services should be construed as legal or accounting advice. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request or by clicking here. Please read the expanded disclosures in the linked report.