I am sure at one point you have been asked the question, “Are you a conservative, moderate, or aggressive investor?” You might be thinking “I have a long investment time frame, I don’t want to be too aggressive with my retirement money …so I must be moderate!” Other times, when the markets head south, you might think, “I don’t want to lose too much money so really I should be a conservative investor.” Often times, these terms can still leave you wondering if your investment mix is right for you.
Sometimes the financial jargon that we as financial professionals throw around makes it very difficult for an investor to truly understand their plan. When it comes to understanding your investment allocation it is really important to feel not only comfortable, but confident with how your plan is being invested. It is my job to help you understand your plan.
I have found that often times clients will identify themselves as moderate or aggressive when the markets appear to be doing great, but quickly switch to “conservative” when the markets turn down. This is a normal emotional response as the goal of investors is to try and make as much as possible while at the same time try to lose as little as possible. The problem is, this can lead to poor short term results.
Defining your investment approach simply as conservative, moderate, or aggressive, may be a bit difficult if you don’t fully understand what the results could look like, say over the next 6 months, or if we had another financial crisis like we did in 2007 – 2009. An investor might identify themselves as a moderate investor, until they opened up their monthly statement in March of 2009. In that case, it quickly became clear that the amount of money the self identified “moderate” investors were willing to lose was significantly different than what the financial professionals were willing to lose.
Let’s make sure we have properly identified your risk.
In September, we announced some new tools to help our clients. One is a new software program called Riskalyze. Since September, about 50 clients have taken advantage of this tool that allows an investor to identify what their risk number is. If you use this software, we can help make sure your current investment mix matches up with your goals. Instead of focusing on the rhetoric on TV, or the horror story of a friend of a friend, wouldn’t it be beneficial to focus on the results you want? Riskalyze can help you answer this question.
In addition to knowing your risk number, having a written plan (and sticking to it) can help you avoid chasing investment results.
Have you ever changed your investment plan or bought into an investment because it sounded good? It was doing great when you bought into it, but it didn’t work out as planned? All of a sudden, what you expected to happen over the next few months didn’t occur.
Instead of just, conservative, moderate, or aggressive, Riskalyze allows you to pinpoint your number between 1 and 100. It allows you to outline your own goals over the next six months. This then allows me to review your current portfolio to try to ensure that your current allocation lines up with your expectations. It allows you to set your own benchmark.
This new complimentary benefit is included for you as a client of our firm. The best way to find out your risk number and see if your portfolio matches up is to come in and sit down with us. We can walk you through the program one on one. Or if you prefer, you can click HERE to take the quiz on your own and have the results emailed directly to you.
Once we have your risk number, we can compare it against your current portfolio and see if there are any changes that need to be made. We hope you enjoy this new service and look forward to getting started with you soon.