Stock markets can be wildly unpredictable, but knowing your risk tolerance will set you up for success
There is no doubt this has been a very difficult year for investors. As the economic situation here at home and around the world continues its bumpy ride, we are all left feeling a bit helpless, and concerned about our own financial security and well-being.
To help reassure you, I thought I would take a few minutes to remind you of some of the steps you have taken to protect your assets.
It is at times like these that the value of having a sound financial plan and a disciplined approach to investing is demonstrated. By having a plan, and following that plan, you are ensuring you are making the right investment decisions for the long-term, instead of reacting to short-term market activity and fluctuations.
Designing your portfolio to help meet your long-term financial goals while taking into account your comfort with risk is all part of that plan. Are you really clear about who you are as an investor and the amount of risk you are willing to take on?
How much could the total value of your investment plan go down before you would feel uncomfortable? 10%? 20%? 30%? If 2008 has taught us anything, it is to make sure you are invested in the right funds that you will feel comfortable with when they go down and when they go back up!
With the right strategy you can put together a great portfolio that will allow you to retire successfully whether you retire in 30 years or 5 years.
To ensure this, our firm completes a Portfolio Optimizer of your risk assesment to accuratly determine which funds will put you in a good position to withstand the downturns of the market, while you can still enjoy the upturns.
For example, a portfolio containing more equities than bonds is much more riskier than one containing more fixed-income assets. Also, we know that every 8 to 10 years the equity markets are going to go through some type of drama. So being well invested years before you retire is essential to a well thought out retirement plan.
Getting expert advice is one way to understand the potential consequences of your investment decisions.
