Balancing debt payoff with investment strategy.
Dr. Sharma is burdened by $280,000 in student loan debt, despite earning a substantial income of $350,000 annually. She's concerned that her current aggressive investment strategy, while potentially lucrative, carries too much risk given her debt obligations. She needs to determine if her portfolio's volatility aligns with her comfort level and financial goals, particularly considering the psychological weight of her large student loan balance.
Using the Portfolio Beta Calculator, we analyzed Dr. Sharma's investment portfolio, revealing a beta of 1.2, indicating higher volatility than the overall market. By reallocating some funds from higher-beta assets to lower-beta, more stable investments, we lowered her portfolio beta to 0.9. This reduces the portfolio's potential for large swings, providing her with peace of mind and allowing her to focus on debt repayment without undue investment stress. Simultaneously, using the Debt-Service-Coverage-Ratio Calculator, she better understood how well her practice income supported her debt repayment.
The Portfolio Beta Calculator allowed for a quick and easy assessment of Dr. Sharma's existing portfolio risk. We entered the allocation percentages and beta values for each asset to calculate the overall portfolio beta. The Debt-Service-Coverage-Ratio provided insight into the financial health of her practice.
$3,500 average annual reduction in investment losses during market downturns due to reduced portfolio volatility.
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