Let’s talk about risky jobs. When I put together a portfolio for a client, I look at how risky their job is. A job can be risky for a variety of reasons. There can be a high risk of injury (coal mining), there can be a high risk of job loss (construction), or the income can be highly variable (sales, business owners). If you have a risky job, you should think twice about doubling down on risk with a risky portfolio.
Does having a risky job mean you should automatically have a boring portfolio tilted towards safe, high quality bonds? No, the fun part about this job is helping individual design a plan that works for them. Conservative portfolios aren’t right for everyone, but here are some reasons why you might want to a more conservative portfolio:
- You own a small business. Most small business’ worth is dependent on the success of the U.S. economy. Are you willing to take the risk that both lose substantial value at the same time? Do you have the time horizon necessary to wait out the next downturn?
- Your income varies significantly year-to-year (think sales or real estate). You are more likely to need to withdraw from savings during a slow economy.
- Your job is highly specialized and hard to do as you age (emergency room doctor). Yes, disability insurance can cover some of this risk, but it doesn’t cover the fact that physically demanding jobs take a greater toll as we age.
I could keep going…but let’s do this instead. If you need help thinking through how risky your job is, email me.