STRATEGY
RISK TOLERANCE
Comfort Zones INFLUENCING YOUR OWN RISK TOLERANCE.
by Deborah Razo
I
t was almost nine years ago and I was just starting out in
one was investing out of the country. Wow, out of the country! How do you manage that? Totally crazy. That was the thought I had at the time. That night I drove home thinking about what felt like a comfortable investment and out of my comfort zone. Basically, I was evaluating my own risk tolerance. I knew that if I couldn’t get the returns I wanted for rentals in Los Angeles I was going to have to change my investment criteria. Maybe get out of the comfort of my own area and invest somewhere that the numbers made more sense. I started to wonder: what would I need
to make investing in another state work for me? What would it take for me to feel like the risk I was taking was mitigated? I was once told that the single big- gest threat to my financial well-being will be my own brain! I recently read that neuroscientists have found that the parts of the brain that process financial loss are the same parts that respond to mortal threats. Think about that, when we are faced with financial loss we respond as if our very own life is being threatened! And we don’t even need to be faced with a real financial loss…but the
real estate investing. I was driving to a local club to hear a speaker on buy-and-hold properties. I was considering getting a rental property in my area of Los Angeles, and didn’t understand how people were mak- ing rentals cashflow locally. During the meeting, we were broken down into groups of four to talk about what geographical areas we were invest- ing in. Of the four of us, one had no investments, one was investing locally (an inherited property free and clear), one was investing out of state and
48 | think realty housing news report :: june / july 2019
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