It’s been a rough month for the stock market and for many peoples’ portfolios. There’s been a lot of money lost and a lot of stress added to the lives to many Americans, regardless of whether they are still working or retired. After all, the markets don’t really care where you are in life or what your plans are. With that in mind, now is a good time to assess your portfolio and take some time to determine where your appetite for risk lies. During your assessment, take some time to find out what changes you will need to make to your portfolio based on the risk and where your greatest losses have been. Are there certain stocks that have decreased further than others? Are there parts of your portfolio that have managed to perform consistently well despite the recent volatility? Has your appetite for risk changed at all over the past month or so? These are just some of the questions you should consider when looking at your portfolio. You will then want to clean out underperforming stocks or holdings and look for strong performing investments that meet the level of risk you are aiming for. As always, I strongly encourage you to talk with an investment professional or wealth manager when assessing your portfolio or thinking about making investment moves. They should be able to provide helpful advice and suggestions that can help position you to better reach your goals or benchmarks.
Many people take a do-it-yourself approach to retirement saving. For various reasons–usually because they feel that they can’t afford a financial advisor–they feel that they can do the retirement saving thing alone. Given the amount of free financial education resources found on the Internet as well as the growing number of companies that offering financial planning resources as part of benefits packages, it’s no surprise that some people feel they can do it alone. However, there are risks to going it alone in retirement planning and saving. One area that many one can run into with a DIY retirement is risk itself. If you aren’t taking steps to manage your risk–such as rebalancing your portfolio or diversifying your investments–then you could be opening yourself to trouble. While you may be thinking about risk when you first balance your retirement portfolio, many people neglect to go back and rebalance it from time to time. Yes, the investments may remain the same, but the risks they carry over time may vary. For example, if you first set your portfolio as 50% stocks and 50% bonds, you may not realize that over a period of time (say, 10 years), that the 50% your originally invested in stocks may actually be worth more than that original 50% you invested in bonds. That larger amount of money in stocks will most likely put you at risk of losing a lot should the stock market tumble. That’s why it’s important that you rebalance your retirement portfolio from time to time to protect yourself and keep up with your appetite for risk. It can be easy to set it and forget it when it comes to your portfolio. This is why it’s a big advantage to have a financial advisor involved in your retirement saving as they know the importance of such rebalancing and understand your appetite for risk.