Analyzing Existing Holdings – Do They Fit the Plan?

In an ideal world, a client would begin working with an advisor with assets that are entirely in cash.   This would make it relatively easy to establish whatever investment accounts are recommended to create a portfolio designed to meet the client’s goals and objectives.

However, this is not an ideal world, and the hypothetical “all-cash scenario” is certainly unlikely.  Most often, people have done some investing and established several – or many – accounts of various types before working with a professional advisor.

Monitoring One’s Portfolio – a Key to Success

Clients generally and appropriately take time and great care when working with their advisor to select allocations to establish a portfolio. 

Investment Policy Statements: Why Have One?

A traditional and popular concept in achieving goals – financial or otherwise -- is to actually write them down.  The act of writing, itself, helps clarify and reinforce one’s objectives.  And the physical list can then serve as a reminder and monitoring device to keep one on track.

Evaluating Risk – How to Make Decisions

With all the types of risk in the marketplace, the question becomes:  Where does one look to get information to help evaluate risk before making an informed investment choice?

Basically, there are two research categories – proprietary and nonproprietary.

Proprietary information, for example, would include that issued by a company, such as annual and quarterly reports, or data on the company’s website.  The prospectus for a mutual fund would also be proprietary information.

Several Types of Investment Risk

The term “market risk” is often heard in discussions regarding investments.  It simply is recognition that an investment may actually lose value because of various factors – economic, political, or other – in the financial marketplace.

Let’s take a look at a few of these risk factors that need to be considered when building a portfolio:

Investment Risk and Price Volatility: Steady Freddy vs. Jekyll and Hyde

Financial planners often talk about a risky investment or a conservative investment, but sometimes we need to stop and define these terms.

A risky investment is one in which, historically, the day-to-day price volatility has been high.  A more conservative investment would be one in which the range between the highs and lows is much more narrow. 

Assessing a Client’s Risk Tolerance

By accurately predicting a client’s risk tolerance  -- and, therefore, their investment behavior – we can design a portfolio strategy with more confidence that our client will stick with it over the course of the plan.  

To begin, we hold conversations with clients.  We also know that a variety of questionnaires available to help in this assessment.

Investment Risk - What It Is, How to Cope

“Risk” may be an inherently worrisome word, yet it is a key factor to consider when building a portfolio designed to meet one’s objectives.  Our next several blogs will define risk in several of its varied forms, and discuss strategies to address it.

Risk Tolerance vs. Risk Capacity

An initial challenge in addressing risk in a client’s portfolio is the simple fact that “risk” is not very well defined, and it presents itself in several forms.

Additional Keys to More Successful Investing

In addition to long-term compounding and riding out market volatility, which I talked about in my last blog, there are a few more strategies that may help you reach your objective of maximizing gains and minimizing losses.

Asset allocation

Asset allocation means spreading one’s dollars over several categories of investments, known as asset classes.   Among the most common are stocks, bonds, and cash. 

Keys to More Successful Investing

The basic objective of an investment portfolio is to maximize gains and minimize losses, and some key strategies and tactics exist that may help do just that. 

Long-term Compounding