Gut Check Time
Now that the market has recovered significantly, it may be time to revisit your levels of investment risk
One of the hardest parts of investing is controlling one's emotions when times are scary. If you did, please mentally pat yourself on the back!
2020 has been incredibly traumatic for the world, and almost everyone has been touched in some way. The amount of fear and uncertainty has been remarkable.
But surprisingly, as of the writing of this note, things have vastly recovered, at least from a financial investment standpoint.
This is why we say "Gut check" when reviewing risks.
I hesitate sending this a bit because I don't want to trigger emotional changes in people's risk levels that may harm your long term results. But its too important not to share.
We want you to know the risks, and be able to tolerate the downside periods because that is how we also get long term growth. The risk goes both ways, but we don't think about making money as a risk. Only losing, but you can't have one without the other.
Preparing yourself in advance to be aware of the risks is a great way to reduce anxiety, and prepare yourself to make wise decisions and to stick with a disciplined plan. This is a good time to reflect on your positions and see if you can emotionally or financially handle the volatility of how you are currently invested, and now might be a time to make changes if your mix seems off.
Making adjustments to asset allocation is rarely wise when things are crashing. So if you are going to reduce risk, try to do it when things are at more normal levels.
Each year the stock market tends to drop about 14% at one point from top to bottom. However, despite this, it ends up more times than down. This is due not only to the dividends that are paid in both up and down markets, but also the growth and profits of the companies driving higher prices over time.
Depending on your goals and timeframe, a certain amount of market risk will be required to achieve the growth you need to meet your goals. If interested, we can show you the likely range of returns for your portfolio might have during both good and bad periods.
Please reach out to us if you would like to review your level of risk. Making adjustments now while the market is near all-time highs is much more desirable than learning, you want less risk when the market is down.
More importantly, it can brace you for normal fluctuations and improve your investing experience and long term results!
Please call or email anytime, we are here for you!