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Investment managers always ask this question and I never know what to answer. I feel like everyone's answer must be the same: maximize return, minimize risk. W

Investment managers always ask this question and I never know what to answer. I feel like everyone's answer must be the same: maximize return, minimize risk. What are possible answers to this question you're looking for?

symmitchry 6y ago
You could be interested in retiring early (or immediately), or you could be interested in buying property overseas and spending your winters in Spain. Also "minimize risk" is not consistent with "maximize return" so that's not even a valid answer. Someone might say "I wanna put it all on Black", and someone else might be saving for their child. Lots of really varied answers are possible.
blahbhthrow3748 6y ago
Time frame - if you need the money next year your risk tolerance is very different compared to if you need the money in 10 years. You can't minimize both risk _and_ return, there's no free lunch
PaulDavisThe1st 6y ago
Time period would be a good place to start.
mensetmanusman 6y ago
Are you looking to help others, or help yourself? E.g. your goal could be to help low income children have better lives. Your goal could be to live on an island mansion in 20 years.
kqr 6y ago
You can't both minimise risk and maximise return. They're polar opposites. ("Risk" is a bad word for the concept. It's more about volatility. The more volatile the asset, the higher the fluctuations, and the less you can expect to still have tomorrow, but the more you'll have in 20 years.) The expected answer is mainly about what risk you are able to tolerate, i.e. how soon you will need the money back again.
jayrobin 6y ago
The general aim is to figure out how much money you need at different points in your life, for example: - how many years until you plan to retire? - how much do you need in retirement? How much do you expect to receive from social security/other income sources? - do you have/are you planning to have kids? Are you going to pay for college? If yes, how much might that cost? - are you expecting any other big expenses in the future? e.g. wedding, down payment on a house - are you planning to take a sabbatical at any point? If yes, for how long and how much do you expect to spend?

symmitchry 6y ago

You could be interested in retiring early (or immediately), or you could be interested in buying property overseas and spending your winters in Spain. Also "minimize risk" is not consistent with "maximize return" so that's not even a valid answer. Someone might say "I wanna put it all on Black", and someone else might be saving for their child. Lots of really varied answers are possible.

blahbhthrow3748 6y ago

Time frame - if you need the money next year your risk tolerance is very different compared to if you need the money in 10 years. You can't minimize both risk _and_ return, there's no free lunch

PaulDavisThe1st 6y ago

Time period would be a good place to start.

mensetmanusman 6y ago

Are you looking to help others, or help yourself? E.g. your goal could be to help low income children have better lives. Your goal could be to live on an island mansion in 20 years.

kqr 6y ago

You can't both minimise risk and maximise return. They're polar opposites. ("Risk" is a bad word for the concept. It's more about volatility. The more volatile the asset, the higher the fluctuations, and the less you can expect to still have tomorrow, but the more you'll have in 20 years.) The expected answer is mainly about what risk you are able to tolerate, i.e. how soon you will need the money back again.

jayrobin 6y ago

The general aim is to figure out how much money you need at different points in your life, for example: - how many years until you plan to retire? - how much do you need in retirement? How much do you expect to receive from social security/other income sources? - do you have/are you planning to have kids? Are you going to pay for college? If yes, how much might that cost? - are you expecting any other big expenses in the future? e.g. wedding, down payment on a house - are you planning to take a sabbatical at any point? If yes, for how long and how much do you expect to spend?