EPISODE 127 – Are You Taking More Investment Risk Than You Think?

If you have been watching your accounts climb over the last few years, it is easy to assume your investments are “working” and your risk level is fine. Markets are up, statements look good, and nothing feels urgent.

The problem is that most people only discover how much risk they are actually taking when the market turns in the wrong direction. By then, the experience can be painful enough to cause emotional decisions that derail a sound financial plan.

In Episode 127 of the Last Paycheck Podcast, CERTIFIED FINANCIAL PLANNER® professionals Archie and Rob Hoxton talk about one of the most common blind spots they see: the gap between how much risk you are comfortable taking and how much risk you are actually taking in your portfolio.

This episode is a practical guide for anyone who wants to understand their risk exposure before the next downturn arrives.

Why Risk Feels Different When Markets Are Up

Archie frames the discussion around two core questions:

  1. How much risk are you truly comfortable taking
  2. How much risk are you actually taking right now

If you do not have clear, data based answers to both, you are at higher risk of being surprised during the next bear market. Surprise and fear are usually what drive investors to sell at the wrong time.

The goal is not to eliminate risk. That would leave you exposed to inflation and short of your long term goals. The goal is to align your risk exposure with your financial plan and your emotional tolerance, so you can stay invested through both good and bad markets.

Systematic vs Unsystematic Risk: What Are You Really Exposed To

The episode walks through two major types of investment risk:

  • Unsystematic risk
    This is the risk tied to a specific company, bond issuer, or sector. If you hold a single stock and that company runs into trouble, your portfolio can suffer badly. Diversification reduces this type of risk by spreading your money across many holdings, industries, and regions.
  • Systematic risk
    This is the risk of the entire market or system. In a true bear market or financial crisis, nearly all stocks fall together. You cannot diversify this risk away completely. You manage it through asset allocation, time horizon, and behavior.

A concentrated portfolio in just a handful of positions may look fine in a rising market, but it is exposed to both kinds of risk at once. A broadly diversified portfolio, built around your plan and withdrawal needs, behaves very differently when volatility returns.

How Much Could Your Portfolio Drop

One of the most practical points in the conversation is that every investor should have at least a ballpark answer to a simple question:

“If we experienced another 2008 style downturn, roughly how far might my portfolio fall”

Most investors, and many advisors, do not have a precise answer. They may speak in generalities like “moderate risk” or “balanced allocation,” but they have not quantified what that means in real dollar terms.

Rob and Archie describe the value of using planning and risk tools that:

  • Analyze your actual mix of funds and holdings
  • Estimate potential downside in severe historical scenarios
  • Compare that with your stated comfort level and goals

You may discover that your portfolio is much riskier than you thought, or that it is actually too conservative to meet your retirement objectives. Either way, you are better off knowing before the next storm, not during it.

Balancing Risk, Return, and Your Life Goals

The episode also emphasizes the tradeoffs involved in dialing risk up or down:

  • If you take very little risk, your expected return may only be a few percent per year. That may require working longer, saving more, or spending less.
  • If you take very high risk, you might see higher long term returns, but also deeper temporary losses that are hard to live through, especially near or in retirement.

The right balance depends on your age, savings, time horizon, and the lifestyle you want to support. A realistic financial plan needs to answer two questions together:

  • What rate of return do I need to reach or sustain my goals
  • What level of downside volatility can I reasonably accept along the way

Those answers then drive your asset allocation and diversification choices, rather than gut feelings or headlines.

Why Now Is the Time To Check Your Risk

We are currently several years into a strong market. That is exactly when it pays to pause and ask:

  • Has my risk level crept up as markets have risen
  • Am I relying on past performance without understanding downside risk
  • Does my portfolio still match my time horizon and withdrawal plans

Archie and Rob point out that corrections of 10 percent tend to happen every couple of years, and bear markets of 20 percent or more tend to show up every five to six years. They are not rare, and they are not permanent, but they are inevitable.

Getting clear on your risk profile now can prevent panic and regret later.

Final Thought: Do You Know Your Real Risk Profile

Ignoring risk does not make it disappear. It only makes the next downturn more stressful.

Taking the time to understand:

  • How your portfolio is currently invested
  • How it might behave in bad markets
  • Whether that aligns with your goals and comfort level

is one of the most important steps you can take for long term financial confidence.

You do not have to become an investment expert to get this right. You simply need a clear plan, honest expectations, and a risk level that you can live with when markets are rising and when they are falling.

If you are not sure whether your investments match your comfort level and retirement goals, now is the time to find out.

Use Hoxton Planning & Management’s Investment Alignment Worksheet to, map your current allocation, compare it to your true risk tolerance, and identify where you may be taking too much or too little risk. Then, if you want a professional second opinion, schedule a conversation with the Hoxton team to review your results and your overall retirement plan.
Download the Worksheet
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.

EPISODE 126 – Is Your House Really an Investment or Just a Home?

If you spend any time online, you have probably seen bold claims about homeownership. Some voices insist you should never pay off your house and instead keep borrowing against it to build a real estate empire. Others argue that buying a house is “the worst investment in the history of mankind” and that you should always rent instead.

In Episode 126 of The Last Paycheck Podcast, CERTIFIED FINANCIAL PLANNER® professionals Archie Hoxton and Rob Hoxton react to this kind of viral housing advice and offer a calmer, more realistic way to think about your home.

Their conclusion is straightforward. A house can be an asset, but for most people it is first and foremost a place to live your life. When you treat it only as an investment, you risk making decisions that look clever on paper but could be dangerous in the real world.

Why “Never Pay Off Your House” Is Risky Advice

One of the clips Archie and Rob review claims that paying off your mortgage is “the biggest mistake of your life.” The suggestion is to borrow aggressively against your home, use that money to buy multiple rental properties, and then live off the cash flow.

On the surface, the math sounds compelling. In practice, it is highly leveraged, highly concentrated risk.

  • It works beautifully in a strong, rising real estate market.
  • It can be devastating if property values fall, tenants disappear, or financing terms change.
  • In a serious downturn, you can end up underwater on multiple properties and lose not only your investments, but your primary home.

Rob and Archie remind listeners that this is not a neutral strategy. It is a speculative business model. For a small subset of people who truly want to be full-time real estate investors, high leverage might be part of the plan. For most families, it is far more risk than they need to take on to have a secure retirement.

A much more realistic path for many households is:

  • Buy a home that fits your budget.
  • Pay the mortgage on schedule, or a little faster if rates are high.
  • Build retirement savings at the same time, through a 401(k), IRA, or other investment accounts.

You do not have to choose between ever paying off your home and saving for retirement. The internet may frame it that way, but sound financial planning rarely does.

Is Buying a House Really a “Terrible Investment”?

Another popular video claims that buying a home is the worst investment you will ever make, once you factor in maintenance, taxes, mortgage interest, and selling costs. The speaker argues that unless your property more than doubles in value in ten years, you are behind.

Archie and Rob acknowledge that there is a grain of truth here. When you count all the costs of ownership, the true financial return on a primary residence may not match stock-market-level returns. That is especially true if:

  • You buy a home and only live in it for a short period.
  • Local prices stagnate or decline.
  • You stretch to buy more house than your budget supports.

However, this is still too narrow a lens. A house is not just a line on a balance sheet.

Your home provides:

  • Shelter and stability.
  • A place to raise children, host holidays, and build community.
  • The ability to customize your environment in a way renting often cannot.

From a planning standpoint, Rob suggests thinking of your home as shelter and possibly as a store of value, not primarily as a high-yield investment. If you make money on it over time, that is a bonus, not the main purpose.

When Renting Makes More Sense

One area where Archie and Rob strongly agree with some of the critics is on time horizon. If you know that you are unlikely to stay in a house for long, renting can absolutely be the smarter financial move.

Situations where renting often makes sense include:

  • You expect to move within five years.
  • Your job, family plans, or location are still in flux.
  • You do not have a sufficient down payment and would be taking on a very large mortgage relative to your income.

Short holding periods magnify closing costs, selling costs, and the risk that the market has a bad stretch at exactly the wrong time. Renting in those seasons can preserve flexibility while you build savings and clarity.

The Quiet Advantage of a Fixed Mortgage Payment

One point that rarely shows up in viral clips is the long-term advantage of a fixed mortgage payment.

If you take out a 30-year fixed-rate mortgage and stay in the home for decades:

  • Your payment stays the same in nominal terms.
  • Your income, in most careers, rises over time.
  • Inflation gradually makes that fixed payment feel smaller in “real” dollars.

As Rob notes, by the time you are in year twenty-five or twenty-eight of your mortgage, you may still be making the same monthly payment, but your salary is far higher than it was in year one. That dynamic can make it easier to accelerate payments near retirement if that fits your plan, or simply enjoy a relatively low housing cost later in life.

How To Decide What Is Right For You

Instead of adopting an extreme stance for or against homeownership, Archie and Rob encourage listeners to ask practical questions that fit their own situation:

  • How long do you realistically expect to stay in this area and this home?
  • Can you afford the payment and still save for retirement and other goals?
  • Are you comfortable taking on real estate investor risk, or do you want a simpler path?
  • Does paying off your home before retirement support your sense of security and flexibility?

The right answer is highly personal. Some clients value the peace of mind of entering retirement without a mortgage. Others prefer to keep a low-rate mortgage and invest extra dollars elsewhere. Still others rent by choice for the flexibility.

A good financial plan makes these trade-offs visible, stress tests them under different market conditions, and helps you align your housing decision with your broader goals.

Final Thought

The loudest voices online often talk about housing in absolutes. Never pay off your house. Never buy. Always leverage. Always rent.

The reality, as Rob and Archie explain, is more nuanced. Your home is a financial decision, but it is also a life decision. When you see it that way, you can ignore the hype and choose the path that supports both your balance sheet and your well-being.

Thinking about buying, refinancing, or paying off your home and wondering how it all fits into your bigger financial picture?

Use Hoxton Planning & Management’s free Net Worth & Budget Worksheet to map out your income, expenses, debts, and assets so you can see clearly what you can afford and how housing decisions affect your long-term plan. If you want help turning that snapshot into a full retirement and investment strategy, you can also start a conversation with the team.
Download the Worksheet
Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, and CFP® (with plaque design) in the United States to Certified Financial Planner Board of Standards, Inc., which authorizes individuals who successfully complete the organization’s initial and ongoing certification requirements to use the certification marks.