{"id":1134,"date":"2019-08-22T10:00:22","date_gmt":"2019-08-22T15:00:22","guid":{"rendered":"https:\/\/www.ramsaywealth.com\/blog\/?p=1134"},"modified":"2019-08-27T12:21:13","modified_gmt":"2019-08-27T17:21:13","slug":"do-your-investments-match-your-risk-tolerance","status":"publish","type":"post","link":"https:\/\/www.ramsaywealth.com\/blog\/2019\/08\/22\/do-your-investments-match-your-risk-tolerance\/","title":{"rendered":"Do Your Investments Match Your Risk Tolerance?"},"content":{"rendered":"\n

When was the last time\nyou looked at the content of your portfolio?<\/em><\/p>\n\n\n\n

From time to time, it is a good idea to\nreview how your portfolio assets are allocated \u2013 how they are divided among\nasset classes.<\/p>\n\n\n\n

At the inception of your investment strategy<\/a>, your target asset allocations reflect your tolerance for risk. Over time, though, your portfolio may need adjustments to maintain those target allocations. <\/p>\n\n\n\n

Since the financial markets are dynamic,\nthe different investments in your portfolio will gain or lose value as\ndifferent asset classes have good or bad years. When stocks outperform more\nconservative asset classes, the portion of your portfolio invested in equities\ngrows more than the other portions. <\/p>\n\n\n\n

To put it another way, the passage of\ntime and the performance of the markets may subtly and slowly imbalance your\nportfolio.<\/p>\n\n\n\n

If too large a percentage of your\nportfolio is held in stocks or stock funds, you may shoulder more investment\nrisk than you want. To address that risk, your portfolio holdings can be\nrealigned to respect the original (target) asset allocations.  <\/strong><\/p>\n\n\n\n

A balanced portfolio is important. <\/strong><\/h4>\n\n\n\n

It would not be if one investment class always outperformed another \u2013 but in the ever-changing financial markets, there is no \u201calways.\u201d In certain market climates, investments with little or no correlation to the stock market become appealing.Some investors choose to maintain a significant cash position at all times, no matter how stocks fare. <\/p>\n\n\n\n

Downside risk \u2013 the possibility of\ninvestments losing value \u2013 can particularly sting investors who are overly\ninvested in momentum\/expensive stocks. Historically, the average price\/earnings\nratio of the S&P 500 has been around 14. A stock with a dramatically higher\nP\/E ratio may be particularly susceptible to downside risk.1<\/sup><\/p>\n\n\n\n

Underdiversification risk can also prove\nto be an Achilles heel. As a hypothetical example of this, say a retiree or\npre-retiree invests too heavily in seven or eight stocks. If shares of even one\nof these firms plummet, that investor\u2019s portfolio may be greatly impacted.1<\/sup><\/p>\n\n\n\n

Are you retired or retiring soon? <\/strong><\/h4>\n\n\n\n

If so, this is all the more reason to review and possibly adjust<\/a> the investment mix in your portfolio. Consistent income and the growth of your invested assets will be among your priorities, and therein lies the appeal of a balanced investment approach, with the twin goals of managing risk and encouraging an adequate return.<\/p>\n\n\n\n

Rich Ramsay may be reached at 651-429-3151 or rich@ramsaywealth.com. https:\/\/www.ramsaywealth.com\/ <\/p>\n\n\n\n

This material was prepared by\nMarketingPro, Inc., and does not necessarily represent the views of the\npresenting party, nor their affiliates. This information has been derived from\nsources believed to be accurate. Please note – investing involves risk, and\npast performance is no guarantee of future results. The publisher is not\nengaged in rendering legal, accounting or other professional services. If\nassistance is needed, the reader is advised to engage the services of a\ncompetent professional. This information should not be construed as investment,\ntax or legal advice and may not be relied on for the purpose of avoiding any\nFederal tax penalty. This is neither a solicitation nor recommendation to\npurchase or sell any investment or insurance product or service, and should not\nbe relied upon as such. All indices are unmanaged and are not illustrative of\nany particular investment.<\/p>\n\n\n\n

Citations.<\/strong> <\/p>\n\n\n\n

1 – thebalance.com\/normal-pe-ratio-stocks-2388545 [2\/27\/19] <\/p>\n","protected":false},"excerpt":{"rendered":"

When was the last time you looked at the content of your portfolio? From time to time, it is a good idea to review how your portfolio assets are allocated \u2013 how they are divided among asset classes. At the … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":1133,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[118,161,179,253],"tags":[294,295,163,183,184,185,170,292,293,285,162,291],"yoast_head":"\nDo Your Investment Strategy and Tolerance Risk Match? | Ramsay Wealth<\/title>\n<meta name=\"description\" content=\"From time to time, it's a good idea to review your investment strategy and portfolio assets \u2013 how they are divided among asset classes. 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