Not timing the markets is one thing. Another mistake is having too much risk in your portfolio. Risk involves the chance that the investment you choose will perform differently than you anticipate.
Portfolio risk can be insidious. Holding a diverse mix of stocks, bonds, and alternatives may seem adequate for managing risk, but it’s just one component. If you correlate these investments-meaning they move in similar patterns-then you could jeopardize your portfolio. If the investments respond to market declines all in the same way, you may increase the risk of losing all your money.
The objective is to take on the amount of risk that still aligns you with your long-term goals. When evaluating your portfolio, ask yourself these questions:
Are you too heavily invested in one asset class, sector, or geographical region?
Do you hold too many alternative investments?
Do you hold many of the same investments or overlap too much?
Is your portfolio correctly structured for your long-term goals, investment horizon, and appetite for risk
Financial Designs is here to help you answer those questions. Contact us for a no-risk consultation call today.