IPS: Ability to take risk

What are the factors that could affect the ability to take risk?

1, time horizon

2, portfolio size

3, liquidity need

Please add more.


Here are more, some are from my notes:

* age (young+) * stable job (+) * healthy, no debt, no children (+) * modest living standard (+) * inheritance, lottery prize, other windfalls(+) * pension and health care supported by government(+) * uncertainty about kids’ college educations(-) * mortgage payment(-) * high living standard(-) * small portfolio size(-) * concentrated stock(-) …

hehe such a long list tulkuu,

for me the more salient issaue is comparing after tax cf needs with asset base…

For DB plans,

  • The financial health of the sponsor;

  • The ratio of active lives to retired lives;

  • The size of the surplus.

For individuals, don’t forget to evaluate human capital (is it “bond like”).

What % do you use as a cutoff?