John Kim, Co-Founder and Co-Chairman of Syncis, is a seasoned financial professional who has helped to enrich the lives of others through his company for several years. Though the pros are financially savvy, most people do not have a thorough understanding of essential monetary concepts. Even if it doesn’t seem important to you now, understanding concepts like those below will help you secure a solid future…
Risk tolerance is the concept of your comfort with the inevitable ups and downs of the financial market. There’s a rollercoaster cycle that causes the market to swing from high to low and back again, and if you allow those swings to stress you, you have a low risk tolerance. It isn’t all emotions, though; risk tolerance also refers to how much time you have to invest, your uninvested assets and your income potential. Most banks provide tools to help you get an understanding of your risk tolerance, or you can get a more personal assessment by speaking with a professional.
Asset allocation refers to where the majority of your money is located or invested. The ideal asset allocation varies by individual needs such as necessary liquidity, goal timing and earning potential. As a topic decided largely by opinion, it is difficult to find one solid view of the best asset allocation for your situation.
Diversification goes hand-in-hand with asset allocation. The goal of diversifying your money is to prevent disaster if one branch of your net worth plummets. It keeps your financial standing balanced, and it prevents too much risk from accumulating. Regular diversification isn’t all good, as it sometimes means selling well-performing assets, but it is considered a must-do by most investors.
Interest is often used in a negative context, referring to the percentage that a lender charges a borrower for the duration of an outstanding balance. When used in a positive context, though, it refers to your money working for you. For example, when you put money in your savings account, you’re allowing your bank to borrow your money, and as such, the bank pays you a small dividend each month based on the amount saved. If you are in debt, the interest you accrue while you pay back the money is almost always more than the interest that you would gain from investing. It is for this reason that financial advisors often recommend debt repayment before you begin investing your funds.
Whether you work with John Kim’s Syncis associates or you educate yourself, if you’re lacking in financial knowledge, now is the time to amend that. The better you understand your money, the more it can work for you (and the less you’ll have to work throughout your lifetime.)