How do you balance Need, Ability and Willingness?

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TheTimeLord
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How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

There have been several threads recently on trying to spend more or investing more aggressively. I personally have been trying to figure this balance for a while now too. At its core this seems to be a "Need, Ability and Willingness" problem. I was just wondering how do other BH balance "New, Ability and Willingness" when it comes to investing in risk assets?

Here is a thread on the topic for those not familiar.
viewtopic.php?t=349491
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Re: How do you balance Need, Ability and Willingness?

Post by alex_686 »

Need and ability can be computed mathematically. What are your goals? What are you market expectations in terms of asset returns and risks (e.g. volatility)

Willingness is psychological and is harder to nail down until you have been in a downturn or two.
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Re: How do you balance Need, Ability and Willingness?

Post by EyeDee »

.
TheTimeLord,

I could never figure Need, Ability, and Willingness out since I could never determine what to use for an expected future rate of return nor what my expenses were going to be in the future (inflation, job loss, long term care costs, etc.), so just gave up and eventually decided on using a sliding glide path that uses 115-age in stocks until get to 50% in stocks at age 65, then goes down by 0.2% a year from age 65 until eventually stopping going down at 45% in stocks at age 90 and beyond. Many investment books and other investment references give various glide path recommendations that you might consider.
Last edited by EyeDee on Thu Nov 24, 2022 11:53 am, edited 1 time in total.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

alex_686 wrote: Thu Nov 24, 2022 11:40 am Need and ability can be computed mathematically. What are your goals? What are you market expectations in terms of asset returns and risks (e.g. volatility)

Willingness is psychological and is harder to nail down until you have been in a downturn or two.
Let's start with the assumption an individual has a low need to take risk and a somewhat high ability but they only have a single aspirational goal for which they would need to take risk but it is a pretty big one in relation to the size of their portfolio and they know they would have a least some level of remorse resulting from the value that might be lost from taking that large a risk. Is there some sort of framework one could use to mentally work through the "go" or "no go" decision of taking the additional risk?
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

EyeDee wrote: Thu Nov 24, 2022 11:51 am .
TheTimeLord,

I could never figure Need, Ability, and Willingness out since I could never determine what to use for an expected future rate of return nor what my expenses were going to be in the future (inflation, job loss, long term care costs, etc.), so just gave up and eventually decided on using a sliding glide path that uses 115-age in stocks until get to 50% in stocks at age 65, then goes down by 0.2% a year from age 65 until eventually stopping going down at 45% in stocks at age 90 and beyond. Many investment books and other investment references give various glide path recommendations that you might consider.
I don't think any of us are going to be able to find a formula for Need/Ability/Risk where we can answer some questions about each, get a value for each and then plug the numbers into a formula that gives us a stock/bond/cash/alternates mix.

What I do think people can do is something more iterative: Start with something like 60:40 stocks:bonds and maybe 66:33 US:international for the stocks and then ask:
  • Do I need to take this much risk?
  • Am I comfortable with this mix, given the behavior over the past 100 years?
  • Assuming some "cautiously reasonable" returns (and what "reasonable" means will depend on the time horizon) does this work?
If all the answers are "yes" then you can probably stop and use that asset mix.

If you have any "no" answers then you need to think about a different mix.

SOME PEOPLE WILL NOT FIND A MIX that they are psychologically comfortable with that also meets their goals and that they can realistically afford. They are then going to have to figure out what aspect isn't going to be met.

But a chunk of this is just going to be introspective.
  • Try to not pick a mix that you KNOW you can't stick with in a downturn.
  • Try to not gamble away a perfectly fine future aiming for money that doesn't matter. Warren Buffett said this about the folks running LTCM:
    But to make money they didn’t have and didn’t need, they risked what they did have and did need,
    Don't do that!
  • Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix
So this is going to be very qualitative and fuzzy, but you can still use the framework to avoid some very obvious mistakes. Mistakes such as having 'enough' + 20% to retire at age 60, having no aspirational spending goals ... and then 'investing' everything in QQQs. Why would you do this??? Or mistakes such as not investing in any risky asset when you know that this won't allow you to retire.

This framework won't help you to fine tune an asset mix, but should help getting in the rough ballpark.

The phrase, "When you've won the game, stop playing" works similarly. The folks at LTCM had "won the game" by any reasonable measure. Then they leveraged up and some of them were bankrupt by the end of 1998. Ooops. Don't do that.
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Re: How do you balance Need, Ability and Willingness?

Post by nisiprius »

MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm...Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix...
[/list]
But be careful here! This isn't your employment.

This is your money, this is your life, you get to set your own goals. Don't let anybody else set them for you. Don't let the retirement advisor set your goals for you!

And you are allowed to change your own goals.

The reason I mention this is that I am convinced that many advisors noodge you to set aggressive goals first, and only after you are committed, disclose that you are going to need to take aggressive risks in order to meet those (now-given) aggressive goals.

Charles R. Schwab wrote a book on retirement, I forget which, in which he pooh-poohed the common rule of thumb of 70% income replacement, and strongly urged a goal of 100% income replacement--as I remember it, for no other reason than that it would be much nicer to have 100% income replacement.

When I had a "retirement checkup" session with a retirement specialist--CFP--at Fidelity, a service offered with my employer's 401(k) plan, the first thing he did was to talk about luxurious aspirations--how much travel did we think we wanted to do, how many new cars we think we wanted to buy, and so on--so that he could slot those into the retirement income planner software. The important thing here was that he started by eliciting goals out of thin air--as opposed to going the other way around, "well, I have $X, how much do you think I'll be able to afford?"
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

nisiprius wrote: Thu Nov 24, 2022 12:33 pm
MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm...Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix...
[/list]
But be careful here! This isn't your employment.

This is your money, this is your life, you get to set your own goals. Don't let anybody else set them for you. Don't let the retirement advisor set your goals for you!

And you are allowed to change your own goals.

The reason I mention this is that I am convinced that many advisors noodge you to set aggressive goals first, and only after you are committed, disclose that you are going to need to take aggressive risks in order to meet those (now-given) aggressive goals.

Charles R. Schwab wrote a book on retirement, I forget which, in which he pooh-poohed the common rule of thumb of 70% income replacement, and strongly urged a goal of 100% income replacement--as I remember it, for no other reason than that it would be much nicer to have 100% income replacement.

When I had a "retirement checkup" session with a retirement specialist--CFP--at Fidelity, a service offered with my employer's 401(k) plan, the first thing he did was to talk about luxurious aspirations--how much travel did we think we wanted to do, how many new cars we think we wanted to buy, and so on--so that he could slot those into the retirement income planner software. The important thing here was that he started by eliciting goals out of thin air--as opposed to going the other way around, "well, I have $X, how much do you think I'll be able to afford?"
"Know thyself"

If someone convinces you that you need 2x the correct amount to retire then you'll make a mistake and either take more risk than necessary, save more then necessary (at the expense of enjoying the present ...) or work longer than necessary (when you maybe don't want to).

GIGO always applies.

But thinking in terms of need (and/or want) is still correct. Arriving at 65, wanting to retire, and discovering that $100K saved is no where CLOSE to what you need for your expected lifestyle is a mistake, too.

So think about these three axes and try to not kid yourself about your answers and try to not be talked into mistakes.
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

nisiprius wrote: Thu Nov 24, 2022 12:33 pm
MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm...Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix...
[/list]
But be careful here! This isn't your employment.

This is your money, this is your life, you get to set your own goals. Don't let anybody else set them for you. Don't let the retirement advisor set your goals for you!

And you are allowed to change your own goals.

The reason I mention this is that I am convinced that many advisors noodge you to set aggressive goals first, and only after you are committed, disclose that you are going to need to take aggressive risks in order to meet those (now-given) aggressive goals.

Charles R. Schwab wrote a book on retirement, I forget which, in which he pooh-poohed the common rule of thumb of 70% income replacement, and strongly urged a goal of 100% income replacement--as I remember it, for no other reason than that it would be much nicer to have 100% income replacement.

When I had a "retirement checkup" session with a retirement specialist--CFP--at Fidelity, a service offered with my employer's 401(k) plan, the first thing he did was to talk about luxurious aspirations--how much travel did we think we wanted to do, how many new cars we think we wanted to buy, and so on--so that he could slot those into the retirement income planner software. The important thing here was that he started by eliciting goals out of thin air--as opposed to going the other way around, "well, I have $X, how much do you think I'll be able to afford?"
Second reply :-)

It also helps if people think in terms of TRADEOFFS.

I can save 50% more to fund a more luxurious retirement, but I'll have to deprive myself more NOW or I'll have to work longer. Is this tradeoff worth it?

It might be better to think in terms of: Need/Ability/Risk/Tradeoffs to make it explicit that there ARE tradeoffs, and not just between need/ability/risk.

But then I'm sure we can fine a 5th to add (my candidate would be life expectancy ...) And a 6th.
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Re: How do you balance Need, Ability and Willingness?

Post by Iorek »

MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm
EyeDee wrote: Thu Nov 24, 2022 11:51 am .
TheTimeLord,

I could never figure Need, Ability, and Willingness out since I could never determine what to use for an expected future rate of return nor what my expenses were going to be in the future (inflation, job loss, long term care costs, etc.), so just gave up and eventually decided on using a sliding glide path that uses 115-age in stocks until get to 50% in stocks at age 65, then goes down by 0.2% a year from age 65 until eventually stopping going down at 45% in stocks at age 90 and beyond. Many investment books and other investment references give various glide path recommendations that you might consider.
I don't think any of us are going to be able to find a formula for Need/Ability/Risk where we can answer some questions about each, get a value for each and then plug the numbers into a formula that gives us a stock/bond/cash/alternates mix.

What I do think people can do is something more iterative: Start with something like 60:40 stocks:bonds and maybe 66:33 US:international for the stocks and then ask:
  • Do I need to take this much risk?
  • Am I comfortable with this mix, given the behavior over the past 100 years?
  • Assuming some "cautiously reasonable" returns (and what "reasonable" means will depend on the time horizon) does this work?
If all the answers are "yes" then you can probably stop and use that asset mix.

If you have any "no" answers then you need to think about a different mix.

SOME PEOPLE WILL NOT FIND A MIX that they are psychologically comfortable with that also meets their goals and that they can realistically afford. They are then going to have to figure out what aspect isn't going to be met.

But a chunk of this is just going to be introspective.
  • Try to not pick a mix that you KNOW you can't stick with in a downturn.
  • Try to not gamble away a perfectly fine future aiming for money that doesn't matter. Warren Buffett said this about the folks running LTCM:
    But to make money they didn’t have and didn’t need, they risked what they did have and did need,
    Don't do that!
  • Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix
So this is going to be very qualitative and fuzzy, but you can still use the framework to avoid some very obvious mistakes. Mistakes such as having 'enough' + 20% to retire at age 60, having no aspirational spending goals ... and then 'investing' everything in QQQs. Why would you do this??? Or mistakes such as not investing in any risky asset when you know that this won't allow you to retire.

This framework won't help you to fine tune an asset mix, but should help getting in the rough ballpark.

The phrase, "When you've won the game, stop playing" works similarly. The folks at LTCM had "won the game" by any reasonable measure. Then they leveraged up and some of them were bankrupt by the end of 1998. Ooops. Don't do that.
I guess If am not sure that everyone who answer no to “do I need to take this risk” should find a new AA.

Should everyone who can fund their needs through LMP/SS/pension put any additional funds into TIPs? I always understood willingness interacted with need in some way.
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Re: How do you balance Need, Ability and Willingness?

Post by Florida Orange »

I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

Iorek wrote: Thu Nov 24, 2022 1:23 pm
MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm
EyeDee wrote: Thu Nov 24, 2022 11:51 am .
TheTimeLord,

I could never figure Need, Ability, and Willingness out since I could never determine what to use for an expected future rate of return nor what my expenses were going to be in the future (inflation, job loss, long term care costs, etc.), so just gave up and eventually decided on using a sliding glide path that uses 115-age in stocks until get to 50% in stocks at age 65, then goes down by 0.2% a year from age 65 until eventually stopping going down at 45% in stocks at age 90 and beyond. Many investment books and other investment references give various glide path recommendations that you might consider.
I don't think any of us are going to be able to find a formula for Need/Ability/Risk where we can answer some questions about each, get a value for each and then plug the numbers into a formula that gives us a stock/bond/cash/alternates mix.

What I do think people can do is something more iterative: Start with something like 60:40 stocks:bonds and maybe 66:33 US:international for the stocks and then ask:
  • Do I need to take this much risk?
  • Am I comfortable with this mix, given the behavior over the past 100 years?
  • Assuming some "cautiously reasonable" returns (and what "reasonable" means will depend on the time horizon) does this work?
If all the answers are "yes" then you can probably stop and use that asset mix.

If you have any "no" answers then you need to think about a different mix.

... snip ...

The phrase, "When you've won the game, stop playing" works similarly. The folks at LTCM had "won the game" by any reasonable measure. Then they leveraged up and some of them were bankrupt by the end of 1998. Ooops. Don't do that.
I guess If am not sure that everyone who answer no to “do I need to take this risk” should find a new AA.

Should everyone who can fund their needs through LMP/SS/pension put any additional funds into TIPs? I always understood willingness interacted with need in some way.
You don't need to find another AA, but you probably should THINK about it. Other AAs come with their own issues ("safer" via more bonds can be more dangerous long-term because of inflation, for example). So knowing that, say 60:40 isn't required doesn't tell you to pick something else. But you probably should THINK about it.

My experience is that "need" shows up more as one gets closer to retirement with a very high stock allocation. I was okay with a 50% drop in my financial assets when I was younger. Going into retirement not so much ... and near retirement I have a much better sense of how much money I have ... near retirement (sounds dumb, I know) than 30 years out. My "need" to take risks in my early 50s is lower than it was when I was 25 (or, at least, how I saw it at 25 ...). So I dialed back my stock exposure. If I was still looking at 15 years of work until I could retire then the "need" would be there, but maybe not the willingness (because a big drop could push retirement out even further and ... oh, G*d). I'd have to seriously think about what I "needed" then.

So, no, don't assume you need to change your AA. But you probably do need to think about changing it if you have a "no" for need/ability/willingness
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
I think this is a good question, but one has to weigh the probabilities, too.

"I want to avoid needing 20 years in a very expensive assisted living facility and not being able to pay for it," may well lead to some really bad choices if avoiding this at all costs dominates the decision.

One other thing that a lot of people underestimate is how hedonic adaptation can make a lifestyle that appeared to be sub-optimal actually feel okay after a bit. Maybe you wanted to travel in retirement and stay at 5-star hotels. And now you can't. Oh, well. Chances are that your happiness won't be effected long-term all that much.

Being homeless at 75 is probably a whole 'nuther story.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

MarkRoulo wrote: Thu Nov 24, 2022 1:13 pm
nisiprius wrote: Thu Nov 24, 2022 12:33 pm
MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm...Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix...
[/list]
But be careful here! This isn't your employment.

This is your money, this is your life, you get to set your own goals. Don't let anybody else set them for you. Don't let the retirement advisor set your goals for you!

And you are allowed to change your own goals.

The reason I mention this is that I am convinced that many advisors noodge you to set aggressive goals first, and only after you are committed, disclose that you are going to need to take aggressive risks in order to meet those (now-given) aggressive goals.

Charles R. Schwab wrote a book on retirement, I forget which, in which he pooh-poohed the common rule of thumb of 70% income replacement, and strongly urged a goal of 100% income replacement--as I remember it, for no other reason than that it would be much nicer to have 100% income replacement.

When I had a "retirement checkup" session with a retirement specialist--CFP--at Fidelity, a service offered with my employer's 401(k) plan, the first thing he did was to talk about luxurious aspirations--how much travel did we think we wanted to do, how many new cars we think we wanted to buy, and so on--so that he could slot those into the retirement income planner software. The important thing here was that he started by eliciting goals out of thin air--as opposed to going the other way around, "well, I have $X, how much do you think I'll be able to afford?"
"Know thyself"

If someone convinces you that you need 2x the correct amount to retire then you'll make a mistake and either take more risk than necessary, save more then necessary (at the expense of enjoying the present ...) or work longer than necessary (when you maybe don't want to).

GIGO always applies.

But thinking in terms of need (and/or want) is still correct. Arriving at 65, wanting to retire, and discovering that $100K saved is no where CLOSE to what you need for your expected lifestyle is a mistake, too.

So think about these three axes and try to not kid yourself about your answers and try to not be talked into mistakes.
what is the correct amount?
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

TheTimeLord wrote: Thu Nov 24, 2022 1:44 pm
MarkRoulo wrote: Thu Nov 24, 2022 1:13 pm
nisiprius wrote: Thu Nov 24, 2022 12:33 pm
MarkRoulo wrote: Thu Nov 24, 2022 12:24 pm...Try to not pick a mix that has such a low expected return that you can't possibly meet your goals by using that mix...
[/list]
But be careful here! This isn't your employment.

This is your money, this is your life, you get to set your own goals. Don't let anybody else set them for you. Don't let the retirement advisor set your goals for you!

And you are allowed to change your own goals.

The reason I mention this is that I am convinced that many advisors noodge you to set aggressive goals first, and only after you are committed, disclose that you are going to need to take aggressive risks in order to meet those (now-given) aggressive goals.

Charles R. Schwab wrote a book on retirement, I forget which, in which he pooh-poohed the common rule of thumb of 70% income replacement, and strongly urged a goal of 100% income replacement--as I remember it, for no other reason than that it would be much nicer to have 100% income replacement.

When I had a "retirement checkup" session with a retirement specialist--CFP--at Fidelity, a service offered with my employer's 401(k) plan, the first thing he did was to talk about luxurious aspirations--how much travel did we think we wanted to do, how many new cars we think we wanted to buy, and so on--so that he could slot those into the retirement income planner software. The important thing here was that he started by eliciting goals out of thin air--as opposed to going the other way around, "well, I have $X, how much do you think I'll be able to afford?"
"Know thyself"

If someone convinces you that you need 2x the correct amount to retire then you'll make a mistake and either take more risk than necessary, save more then necessary (at the expense of enjoying the present ...) or work longer than necessary (when you maybe don't want to).

GIGO always applies.

But thinking in terms of need (and/or want) is still correct. Arriving at 65, wanting to retire, and discovering that $100K saved is no where CLOSE to what you need for your expected lifestyle is a mistake, too.

So think about these three axes and try to not kid yourself about your answers and try to not be talked into mistakes.
what is the correct amount?
YOU have to decide this.

"Know thyself"

This is why you aren't going to get a formula out of this. Sorry about that!

Do you "need" a new $50K car every five years in retirement? I know that I don't, but I don't know about you. If YOU DO then you have moved your "need" up and will have to save more, retire later or take more risk and hope it works out. If the risk appears then you'll be even further behind where you want to be (that is the risk).

But it would be foolish to save as if you needed, say, $5M when you are pretty sure you can get by fine with only $50K/year.

This is a framework, not a mathematical formula.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

There is probably a serious question here about whether or not investing eventually become a game for some and they are just trying to level up.
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Re: How do you balance Need, Ability and Willingness?

Post by MarkRoulo »

TheTimeLord wrote: Thu Nov 24, 2022 1:49 pm There is probably a serious question here about whether or not investing eventually become a game for some and they are just trying to level up.
The folks who founded LTCM (Long Term Capital Management) were definitely playing a game that they wanted to win. So, trivially, the answer to your serious question is that, "yes, investing becomes or is a game for some people." My guess is that there are folks here who treat it that way, too, though I can't guess how many. I'd just be surprised if the number was zero. But I wouldn't be surprised if the number was low.

I think the practical "problem" is that when one is young treating saving/investing as a game where you are trying to level up is a pretty good strategy. I think my behavior could be described that way for a few decades.

The danger is taking that mindset into retirement and the years right before it. And even *THAT* often works :-)
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Re: How do you balance Need, Ability and Willingness?

Post by AnnetteLouisan »

Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
Yes same here. It’s more about avoiding / protecting against financial misfortune and its accompanying conditions for me than wanting more.

Seneca said, “bring poor isn’t about having less, but wanting more.” Easy to say when you have enough though.
Last edited by AnnetteLouisan on Thu Nov 24, 2022 2:34 pm, edited 1 time in total.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

MarkRoulo wrote: Thu Nov 24, 2022 1:57 pm
TheTimeLord wrote: Thu Nov 24, 2022 1:49 pm There is probably a serious question here about whether or not investing eventually become a game for some and they are just trying to level up.
The folks who founded LTCM (Long Term Capital Management) were definitely playing a game that they wanted to win. So, trivially, the answer to your serious question is that, "yes, investing becomes or is a game for some people." My guess is that there are folks here who treat it that way, too, though I can't guess how many. I'd just be surprised if the number was zero. But I wouldn't be surprised if the number was low.

I think the practical "problem" is that when one is young treating saving/investing as a game where you are trying to level up is a pretty good strategy. I think my behavior could be described that way for a few decades.

The danger is taking that mindset into retirement and the years right before it. And even *THAT* often works :-)
I guess I wasn't clear. It eventually becomes a game for some when sufficient willingness is combined with a very low need, a very high ability and the utility of an additional dollar is pretty much zero thus the score is all they are concentrated on.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

AnnetteLouisan wrote: Thu Nov 24, 2022 2:03 pm
Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
Yes same here. It’s more about avoiding / protecting against financial misfortune and its accompanying conditions for me than wanting.

Seneca said, “bring poor isn’t about having less, but wanting more.” Easy to say when you have enough though.
Not a bad question to consider, but it needs to be balanced with the cost of guarding against that outcome and the outcome's likelihood.
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Re: How do you balance Need, Ability and Willingness?

Post by Beensabu »

Easy: Need < Willingness < Ability

Easy: Need < Ability < Willingness

Easy: Willingness < Need < Ability

Hard: Ability < Willingness < Need

Hard: Willingness < Ability < Need

Hard: Ability < Need < Willingness

If ability is greater than need, you're good.

But if need is greater than ability, that's tough.
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Re: How do you balance Need, Ability and Willingness?

Post by enad »

TheTimeLord wrote: Thu Nov 24, 2022 11:28 am There have been several threads recently on trying to spend more or investing more aggressively. I personally have been trying to figure this balance for a while now too. At its core this seems to be a "Need, Ability and Willingness" problem. I was just wondering how do other BH balance "New, Ability and Willingness" when it comes to investing in risk assets?

Here is a thread on the topic for those not familiar.
viewtopic.php?t=349491
My strategy is/was to not withdraw any money from my retirement accounts outside of the requisite minimum distributions, and that money is reinvested on an after tax basis and used for whatever comes up. I saved early and often and don't believe I missed out on anything in life. I don't see it as a need, ability or willingness issue. However, I will admit that everyone's situation is not the same and what works for some will not work for others. I saw a license plate frame on a very fast looking sports car that read "He who dies with the most toys wins" and laughed.
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Re: How do you balance Need, Ability and Willingness?

Post by AnnetteLouisan »

TheTimeLord wrote: Thu Nov 24, 2022 2:18 pm
AnnetteLouisan wrote: Thu Nov 24, 2022 2:03 pm
Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
Yes same here. It’s more about avoiding / protecting against financial misfortune and its accompanying conditions for me than wanting.

Seneca said, “bring poor isn’t about having less, but wanting more.” Easy to say when you have enough though.
Not a bad question to consider, but it needs to be balanced with the cost of guarding against that outcome and the outcome's likelihood.
And that likelihood varies for each of us, as do our perceptions of the likelihood and the cost of protecting against it.
Last edited by AnnetteLouisan on Thu Nov 24, 2022 2:48 pm, edited 1 time in total.
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Re: How do you balance Need, Ability and Willingness?

Post by vineviz »

TheTimeLord wrote: Thu Nov 24, 2022 11:28 am There have been several threads recently on trying to spend more or investing more aggressively. I personally have been trying to figure this balance for a while now too. At its core this seems to be a "Need, Ability and Willingness" problem. I was just wondering how do other BH balance "New, Ability and Willingness" when it comes to investing in risk assets?

Here is a thread on the topic for those not familiar.
viewtopic.php?t=349491
I prefer to think of those three things ("Need, Ability and Willingness" ) not as things to be "balanced" but as guidelines.

In other words, don't take more risk than you're able to take. Don't take less risk than you need to take. In between those bounds, let "willingness" dictate your approach.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

AnnetteLouisan wrote: Thu Nov 24, 2022 2:38 pm
TheTimeLord wrote: Thu Nov 24, 2022 2:18 pm
AnnetteLouisan wrote: Thu Nov 24, 2022 2:03 pm
Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
Yes same here. It’s more about avoiding / protecting against financial misfortune and its accompanying conditions for me than wanting.

Seneca said, “bring poor isn’t about having less, but wanting more.” Easy to say when you have enough though.
Not a bad question to consider, but it needs to be balanced with the cost of guarding against that outcome and the outcome's likelihood.
And that likelihood varies for each of us, as does our perceptions of the likelihood and the cost of protecting against it.
True, but I would still suggest an attempt at some cost benefit analysis might be helpful when evaluating the question "what is the outcome I most want to avoid".
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Re: How do you balance Need, Ability and Willingness?

Post by Beensabu »

vineviz wrote: Thu Nov 24, 2022 2:40 pm In other words, don't take more risk than you're able to take. Don't take less risk than you need to take. In between those bounds, let "willingness" dictate your approach.
That's this one (the best one):

Easy: Need < Willingness < Ability
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Re: How do you balance Need, Ability and Willingness?

Post by AnnetteLouisan »

TheTimeLord wrote: Thu Nov 24, 2022 2:44 pm
AnnetteLouisan wrote: Thu Nov 24, 2022 2:38 pm
TheTimeLord wrote: Thu Nov 24, 2022 2:18 pm
AnnetteLouisan wrote: Thu Nov 24, 2022 2:03 pm
Florida Orange wrote: Thu Nov 24, 2022 1:23 pm I have always found it useful to ask myself "what is the outcome I most want to avoid" and go from there.
Yes same here. It’s more about avoiding / protecting against financial misfortune and its accompanying conditions for me than wanting.

Seneca said, “bring poor isn’t about having less, but wanting more.” Easy to say when you have enough though.
Not a bad question to consider, but it needs to be balanced with the cost of guarding against that outcome and the outcome's likelihood.
And that likelihood varies for each of us, as does our perceptions of the likelihood and the cost of protecting against it.
True, but I would still suggest an attempt at some cost benefit analysis might be helpful when evaluating the question "what is the outcome I most want to avoid".
We don’t know either one though, right? We just see examples.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

At this point I am becoming convinced the answer is:

"I am a leaf on the wind - watch how I soar."
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Re: How do you balance Need, Ability and Willingness?

Post by Beensabu »

TheTimeLord wrote: Thu Nov 24, 2022 11:53 am Let's start with the assumption an individual has a low need to take risk
yay
and a somewhat high ability
yay
but they only have a single aspirational goal for which they would need to take risk
uh oh
but it is a pretty big one in relation to the size of their portfolio
uh oh
and they know they would have a least some level of remorse resulting from the value that might be lost from taking that large a risk
uh oh
Is there some sort of framework one could use to mentally work through the "go" or "no go" decision of taking the additional risk?
If the additional risk taken in pursuit of meeting the single aspirational goal showed up, and the value that might be lost was in fact lost, would that individual still be able to meet the original non-aspirational goal for which there was a low need to take risk?

If yes, then it's willingness that determines whether you "go".

If no, then it's a "no go".
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Re: How do you balance Need, Ability and Willingness?

Post by Fallible »

TheTimeLord wrote: Thu Nov 24, 2022 2:15 pm
MarkRoulo wrote: Thu Nov 24, 2022 1:57 pm
TheTimeLord wrote: Thu Nov 24, 2022 1:49 pm There is probably a serious question here about whether or not investing eventually become a game for some and they are just trying to level up.
The folks who founded LTCM (Long Term Capital Management) were definitely playing a game that they wanted to win. So, trivially, the answer to your serious question is that, "yes, investing becomes or is a game for some people." My guess is that there are folks here who treat it that way, too, though I can't guess how many. I'd just be surprised if the number was zero. But I wouldn't be surprised if the number was low.

I think the practical "problem" is that when one is young treating saving/investing as a game where you are trying to level up is a pretty good strategy. I think my behavior could be described that way for a few decades.

The danger is taking that mindset into retirement and the years right before it. And even *THAT* often works :-)
I guess I wasn't clear. It eventually becomes a game for some when sufficient willingness is combined with a very low need, a very high ability and the utility of an additional dollar is pretty much zero thus the score is all they are concentrated on.
OP, there is a fourth part to Larry Swedroe's guide on the wiki's "Asset allocation" page that maybe you haven't seen and could be helpful. It takes up how you should handle "difficult choices among ability, willingness, and need to take risk." Since conflicts among the three parts seem inevitable, this fourth part probably should be included when mentioning the "guide" overall.

https://www.cbsnews.com/news/asset-allo ... ing-goals/
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Re: How do you balance Need, Ability and Willingness?

Post by Lawrence of Suburbia »

My need's in some future danger of bumping up against my ability to provide for the need out of my portfolio. 4% being the SAFEMAX rate, I'm taking out ~3.5% at the moment.Thankful for the COLA next year in SS.

For now, I have Seneca's (and John Bogle's) "enough". I face the Sun and give thanks on this very Thanksgiving Day.
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Re: How do you balance Need, Ability and Willingness?

Post by carminered2019 »

I see very little risk in the market for any 10 consecutive years so I keep 10 years in safe assets. I have a fixed number so anything above that I will spend weather its a 200K car or a 600K fishing boat.
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Re: How do you balance Need, Ability and Willingness?

Post by AnnetteLouisan »

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Re: How do you balance Need, Ability and Willingness?

Post by finite_difference »

Beensabu wrote: Thu Nov 24, 2022 2:21 pm Easy: Need < Willingness < Ability

Easy: Need < Ability < Willingness

Easy: Willingness < Need < Ability

Hard: Ability < Willingness < Need

Hard: Willingness < Ability < Need

Hard: Ability < Need < Willingness

If ability is greater than need, you're good.

But if need is greater than ability, that's tough.
You are suggesting that we can simplify the analysis by ignoring willingness? I think I agree with you if we assume that we are comfortably select an asset allocation such that willingness = ability?
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Re: How do you balance Need, Ability and Willingness?

Post by Marseille07 »

Beensabu wrote: Thu Nov 24, 2022 2:21 pm If ability is greater than need, you're good.

But if need is greater than ability, that's tough.
I don't follow how you can compare like that.

Let's say a 30yo is making 100K/year having a stable job but no assets. Let's say their need is to make 2M in 20 years. Is their ability greater than need or less than need? How did you calculate that?
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Re: How do you balance Need, Ability and Willingness?

Post by Triple digit golfer »

Marseille07 wrote: Fri Nov 25, 2022 2:03 am
Beensabu wrote: Thu Nov 24, 2022 2:21 pm If ability is greater than need, you're good.

But if need is greater than ability, that's tough.
I don't follow how you can compare like that.

Let's say a 30yo is making 100K/year having a stable job but no assets. Let's say their need is to make 2M in 20 years. Is their ability greater than need or less than need? How did you calculate that?
You can't quantify ability. It's the emotional aspect.

If an investor only needs 0% returns, he can get that in cash and has the ability to tolerate it because there are no fluctuations.

If an investor needs 10% returns but gets spooked at a 20% drawdown and has urges to sell when it happens, he's in trouble because to potentiality get 10%, he certainly will have to be invested in assets that are volatile and subject to 20%+ drawdowns.
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Re: How do you balance Need, Ability and Willingness?

Post by vineviz »

Triple digit golfer wrote: Fri Nov 25, 2022 2:47 am
Marseille07 wrote: Fri Nov 25, 2022 2:03 am
Beensabu wrote: Thu Nov 24, 2022 2:21 pm If ability is greater than need, you're good.

But if need is greater than ability, that's tough.
I don't follow how you can compare like that.

Let's say a 30yo is making 100K/year having a stable job but no assets. Let's say their need is to make 2M in 20 years. Is their ability greater than need or less than need? How did you calculate that?
You can't quantify ability. It's the emotional aspect.
In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
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Re: How do you balance Need, Ability and Willingness?

Post by Marseille07 »

vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
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Re: How do you balance Need, Ability and Willingness?

Post by Triple digit golfer »

TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
Mine either. I was wrong above, but this is also not right.

I believe that what Beensabu was saying, though, is essentially what I said.
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Re: How do you balance Need, Ability and Willingness?

Post by vineviz »

TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Re: How do you balance Need, Ability and Willingness?

Post by Marseille07 »

vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Thanks. Glad we're on the same page.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
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Re: How do you balance Need, Ability and Willingness?

Post by smitcat »

TheTimeLord wrote: Fri Nov 25, 2022 12:04 pm
vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
"I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn."

Did you not just define "need'?
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Re: How do you balance Need, Ability and Willingness?

Post by Marseille07 »

smitcat wrote: Fri Nov 25, 2022 12:28 pm "I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn."

Did you not just define "need'?
Well "need" is more like how much you want to try to get to.

I think they described risk tolerance perhaps?
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Re: How do you balance Need, Ability and Willingness?

Post by vineviz »

TheTimeLord wrote: Fri Nov 25, 2022 12:04 pm
vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am
vineviz wrote: Fri Nov 25, 2022 10:07 am In this three-way framework, "need" and "ability" are both relatively objective bounds. They are mostly described by the expected return you need to reach your goal and how much loss you can sustain without jeopardizing the goal.

It's "willingness" that introduces so-called emotional component.

In practice, all three pieces are difficult to quantify but as long as we're going to attempt to make a decision we have to put the costs and benefits into some sort of discrete form.
Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
I like the definitions provided by John E. Grable in the CFA Institute brief called "Financial Risk Tolerance: A Psychometric Review". I think the PDF is freely downloadable. Ultimately it is written to help practitioners evaluate risk tolerance for clients, but it's a short read and I think interesting.

The general area of "risk" and "risk tolerance" gets about as sloppy and inconsistent treatment as any in personal finance, IMHO, but I feel that Grable does a good job of pulling together the various terms.

Image

In this list, "risk need" is obviously directly applicable to the discussion. "Risk capacity" is analogous to "ability" (and I prefer "capacity" because more people will get the sense of objectivity that it conveys). "Risk tolerance", "risk preference", and "risk perception" would all be dimensions of "willingness".
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

smitcat wrote: Fri Nov 25, 2022 12:28 pm
TheTimeLord wrote: Fri Nov 25, 2022 12:04 pm
vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am
Marseille07 wrote: Fri Nov 25, 2022 11:30 am

Correct. Ability is just...how good your income / skill set is, which allows you to take on more risk.
That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
"I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn."

Did you not just define "need'?
Just to be clear let me expand on the one word terms with my understanding of their definitions, correct or incorrect. I am sure others have different definitions and understandings some that are likely widely accepted.

Need = The amount of risk one needs to assume to meet a financial objective based on a given set of assumptions
Ability = The amount of a risk one is able to take and in the worst case still meet a financial objective based on a given set of assumptions
Willingness = The amount of risk one chooses to take, generally assumed to be somewhere between Need and Ability.
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Re: How do you balance Need, Ability and Willingness?

Post by Marseille07 »

TheTimeLord wrote: Fri Nov 25, 2022 12:50 pm
smitcat wrote: Fri Nov 25, 2022 12:28 pm
TheTimeLord wrote: Fri Nov 25, 2022 12:04 pm
vineviz wrote: Fri Nov 25, 2022 11:59 am
TheTimeLord wrote: Fri Nov 25, 2022 11:55 am

That is not my understanding of the definition of ability to take risk.
It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
"I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn."

Did you not just define "need'?
Just to be clear let me expand on the one word terms with my understanding of their definitions, correct or incorrect. I am sure others have different definitions and understandings some that are likely widely accepted.

Need = The amount of risk one needs to assume to meet a financial objective based on a given set of assumptions
Ability = The amount of a risk one is able to take and in the worst case still meet a financial objective based on a given set of assumptions
Willingness = The amount of risk one chooses to take, generally assumed to be somewhere between Need and Ability.
Well, perhaps this wiki helps? https://www.bogleheads.org/wiki/Risk_tolerance

Unless others object, we should be using Larry Swedroe's definition here.
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vineviz
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Re: How do you balance Need, Ability and Willingness?

Post by vineviz »

Marseille07 wrote: Fri Nov 25, 2022 12:54 pm Unless others object, we should be using Larry Swedroe's definition here.
I don't know what his definitions are, but I'm not prepared to assume they should be preferred over superior definitions already in use.
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Re: How do you balance Need, Ability and Willingness?

Post by TheTimeLord »

Marseille07 wrote: Fri Nov 25, 2022 12:54 pm
TheTimeLord wrote: Fri Nov 25, 2022 12:50 pm
smitcat wrote: Fri Nov 25, 2022 12:28 pm
TheTimeLord wrote: Fri Nov 25, 2022 12:04 pm
vineviz wrote: Fri Nov 25, 2022 11:59 am

It is the original and correct definition. Obviously I can't promise every author will use the correct definition, but I think with a little consideration you'll see that it's the only one that makes sense.
Interesting, I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn.
"I have always understood it to relate to a portfolio size, the portfolio's ability to satisfy one's financial need thus the ability to withstand the possible loss from additional risk as opposed to one's ability to earn."

Did you not just define "need'?
Just to be clear let me expand on the one word terms with my understanding of their definitions, correct or incorrect. I am sure others have different definitions and understandings some that are likely widely accepted.

Need = The amount of risk one needs to assume to meet a financial objective based on a given set of assumptions
Ability = The amount of a risk one is able to take and in the worst case still meet a financial objective based on a given set of assumptions
Willingness = The amount of risk one chooses to take, generally assumed to be somewhere between Need and Ability.
Well, perhaps this wiki helps? https://www.bogleheads.org/wiki/Risk_tolerance

Unless others object, we should be using Larry Swedroe's definition here.
Do you see daylight between those and these?
vineviz wrote: Wed May 12, 2021 11:02 am A recommendation of "take no more risk than needed" doesn't seem very clear headed unless the concept of "risk" is VERY specifically defined in a way that is contrary to what I suspect most people think when they hear a phrase like this.

In the need/ability/willingness framework it is "ability" that should place the upper bound on the risk you take: "Don't take more risk than you are able to bear." If you can't afford to lose more than $100, don't bet more than $100.

"Need" is the concept that should place the lower bound on the risk you take: "Don't take less risk than you need to take in order to achieve financial goals."

"Willingness" is the concept that allows the investor to pick the spot between the level of risk they "need" to take and the level they are "able" to take which suits their preferences.

Note that "need" and "ability" are essentially objective functions. It's never literally true that they are COMPLETELY exogenous constraints, but they are mostly exogenous. "Willingness" is almost completely a subjective function, one that lets the investor find the spot they are most comfortable with.
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Re: How do you balance Need, Ability and Willingness?

Post by stan1 »

I can see this is going to turn into an "A Way With Words" debate on the English language.
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