{"id":1888,"date":"2021-11-29T16:53:14","date_gmt":"2021-11-29T16:53:14","guid":{"rendered":"https:\/\/www.gunderwealth.com\/?p=1888"},"modified":"2021-11-29T20:24:39","modified_gmt":"2021-11-29T20:24:39","slug":"risk-vs-luck","status":"publish","type":"post","link":"https:\/\/www.gunderwealth.com\/risk-vs-luck\/","title":{"rendered":"Risk vs. Luck"},"content":{"rendered":"<p>[et_pb_section fb_built=&#8221;1&#8243; admin_label=&#8221;Section&#8221; _builder_version=&#8221;3.22.3&#8243; da_disable_devices=&#8221;off|off|off&#8221; global_colors_info=&#8221;{}&#8221; da_is_popup=&#8221;off&#8221; da_exit_intent=&#8221;off&#8221; da_has_close=&#8221;on&#8221; da_alt_close=&#8221;off&#8221; da_dark_close=&#8221;off&#8221; da_not_modal=&#8221;on&#8221; da_is_singular=&#8221;off&#8221; da_with_loader=&#8221;off&#8221; da_has_shadow=&#8221;on&#8221;][et_pb_row admin_label=&#8221;Row&#8221; _builder_version=&#8221;3.25&#8243; global_colors_info=&#8221;{}&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; global_colors_info=&#8221;{}&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_image src=&#8221;https:\/\/www.gunderwealth.com\/wp-content\/uploads\/2021\/11\/Untitled-design.png&#8221; alt=&#8221;Risk vs. Luck&#8221; title_text=&#8221;Untitled design&#8221; align=&#8221;center&#8221; force_fullwidth=&#8221;on&#8221; align_tablet=&#8221;center&#8221; align_phone=&#8221;&#8221; align_last_edited=&#8221;on|phone&#8221; _builder_version=&#8221;4.13.1&#8243; max_height=&#8221;800px&#8221; global_colors_info=&#8221;{}&#8221;][\/et_pb_image][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=&#8221;4.11.4&#8243; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; collapsed=&#8221;off&#8221; global_colors_info=&#8221;{}&#8221;][et_pb_column type=&#8221;4_4&#8243; _builder_version=&#8221;3.25&#8243; custom_padding=&#8221;|||&#8221; global_colors_info=&#8221;{}&#8221; custom_padding__hover=&#8221;|||&#8221;][et_pb_text admin_label=&#8221;Text&#8221; _builder_version=&#8221;4.13.1&#8243; ul_line_height=&#8221;1.7em&#8221; header_line_height=&#8221;1.5em&#8221; header_3_line_height=&#8221;1.5em&#8221; background_size=&#8221;initial&#8221; background_position=&#8221;top_left&#8221; background_repeat=&#8221;repeat&#8221; hover_enabled=&#8221;0&#8243; global_colors_info=&#8221;{}&#8221; sticky_enabled=&#8221;0&#8243;]<\/p>\n<h3><strong>Are risk and luck the same thing, just with different outcomes?<\/strong><\/h3>\n<p>Let&#8217;s define these terms:<\/p>\n<ul>\n<li><strong>Risk<\/strong>: A situation involving exposure to danger.<\/li>\n<li><strong>Luck<\/strong>: Success or failure brought on by chance rather than one&#8217;s actions.<\/li>\n<\/ul>\n<p>After reading Morgan Housel&#8217;s book, <a href=\"https:\/\/www.amazon.com\/Psychology-Money-Timeless-lessons-happiness\/dp\/0857197681\">The Psychology of Money<\/a>, we reframe these definitions:<\/p>\n<p>The difference is that <strong>risk<\/strong> and <strong>luck<\/strong> are associated with <strong>negative<\/strong> and <strong>positive<\/strong> outcomes, respectively.<\/p>\n<p>Taking another step back, you may recall events outside your control that significantly influenced past outcomes. <strong>Was that due to risk or luck?<\/strong><\/p>\n<h3><strong>Ask yourself these questions:\u00a0<\/strong><\/h3>\n<ul>\n<li>How do you define risk, and how do you assess your risk appetite?<\/li>\n<li>Should you take more or less depending upon your goals?<\/li>\n<li>What life experiences shaped how you think about risk?<\/li>\n<\/ul>\n<p>It&#8217;s nearly impossible to find any piece of news that doesn&#8217;t mention risk, but you don&#8217;t see very much suggesting luck! <strong>That&#8217;s likely because luck is harder to quantify and predict.<\/strong><\/p>\n<p>On the risk front, we consistently analyze risk-adjusted returns, standard deviation, Sharpe ratios, and other measures of volatility. While these items are essential when crafting an investment portfolio, we question whether it&#8217;s the most productive way to think about risk.<\/p>\n<h3><strong>Our analysis of risk depends on:<\/strong><\/h3>\n<ul>\n<li><strong>Where do you want to go vs. where are you now?<\/strong> How much risk do you need to take in your portfolio to get there? Does that align with your risk tolerance?<\/li>\n<li><strong>How do you quantify the risk taken in all aspects of your life (not just in your investment portfolio)?<\/strong> Asked another way, do you consistently speed through yellow lights but sell when there&#8217;s a dip in the market?<\/li>\n<\/ul>\n<p>In this context, there&#8217;s no single definition of risk. Whether it&#8217;s paying down your mortgage early, keeping cash under your mattress, or liquidating your savings to start a business, <strong>risk doesn&#8217;t need to be consistent, but you should quantify it in the aggregate.<\/strong><\/p>\n<p>As financial advisors, we&#8217;re here to craft a plan that considers your appetite for risk to help you achieve your next adventure (and the next one after that!). <a href=\"http:\/\/www.gunderwealth.com\/contact\">Let us know<\/a> if we can help!<\/p>\n<p>[\/et_pb_text][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are risk and luck the same thing, just with different outcomes? Let&#8217;s define these terms: Risk: A situation involving exposure to danger. Luck: Success or failure brought on by chance rather than one&#8217;s actions. After reading Morgan Housel&#8217;s book, The Psychology of Money, we reframe these definitions: The difference is that risk and luck are [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":1890,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"<!-- wp:paragraph -->\r\n<p>Welcome to WordPress. This is your first post. Edit or delete it, then start writing!<\/p>\r\n<!-- \/wp:paragraph -->","_et_gb_content_width":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[24],"tags":[133,132],"class_list":["post-1888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-food-for-thought","tag-luck","tag-risk"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Risk vs. Luck - Gunder Wealth Management<\/title>\n<meta name=\"description\" content=\"Are risk and luck the same thing, just with different outcomes? 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