It’s true that big risks can lead to big rewards, but with those risks comes a lot of other concerns and feelings. The one question I always ask people is if they are comfortable with and willing to accept certain degrees of investment risk required to achieve the investment rate of return needed? If you’re not, then lower the rate of return until you are. I always suggest talking with your investment and/or wealth advisor to determine the rate of return you’re willing and comfortable with choosing.

For my clients, I pull out the Wealth Building Formula®, and help visualize what happens if you play with the rate of return: if you increase the % Return, then the other variables like T (time) and C (investable cash) will decrease. You will achieve what you wish in less time and with less wealth. Or, on the right side of the equation, you will have more $$$ (cash flow). Knowing your risk tolerance (how you feel about possible decreases in value of your portfolio) is important to sleeping well at night.

One way to help ease your concerns about increasing the rate of return is to find investable cash and reduce the necessary risk in your portfolio. As a simple example, suppose that you have a $5 million investment portfolio and you determine by your Wealth Building Formula® that your % Return or your long-term investment return objective should be 6 percent.  However, you find a way to generate additional investable cash of $50,000 per year through our Integrated Cash Flow Management™ process. One percent of $5 million is $50,000. Since you have found this additional cash flow, you may be able to reduce your % Return to 5 percent instead of 6 percent, thus lowering the risk in your investment portfolio. If you want more cash flow from your wealth, and you cannot find more investable cash elsewhere, then the return you receive from your portfolio has to increase, which will increase your risk.

It’s up to you to determine what you feel comfortable with in terms of your return. To discuss the risks you’re willing to take, visit for more information.