Thursday, July 9, 2020

Is Your Portfolio Too Risky?

Promoted Partner content.

The worldwide spread of the coronavirus has caused record volatility in financial markets around with world.  The U.S. stock market lost roughly a third of its value from February 19th to March 23rd, but then mounted a powerful rally to reclaim the large majority of that loss.

Unfortunately, extreme market volatility offers investors the opportunity to make quick decisions that will negatively impact their finances for years. Amid huge market swings, investors become more concerned with avoiding the next leg of the downturn, rather than doing the most important thing for long-term investors—which is to be invested when the market goes up. And because markets tend to rise suddenly and unexpectedly, many investors have been on the sidelines for much of the recent rally.

- Advertisement -

For investors not to be shaken out of their investment positions during volatility, it is vital for them to:

  1. Know their risk tolerance
  2. Invest according to their risk tolerance

Thus, the most important number for any investor to know is not the level of the S&P 500 or the yield on the 10-year Treasury or any other number related to the financial markets. Instead, to invest comfortably and productively through bull and bear markets alike, an investor must know his or her own personal Risk Number.

What Is A Risk Number?

- Advertisement -

Your Risk Number, calculated using a proprietary algorithm from financial technology company Riskalyze, is a number on a scale of 1 to 100 that defines how much risk you are willing to take to earn investment returns. For example, someone with a Risk Number of 15 is a very conservative investor who is seeking a lower level of portfolio risk along with a lower rate of return. Someone with a Risk Number of 89, however, is an aggressive investor willing to take on significant portfolio risk in pursuit of higher returns.

It is critically important for investors to invest in a way that is both comfortable and appropriate for them—thus, to invest according to their own personal risk tolerance. If you don’t, one of two bad things can happen!

  • If you invest too conservatively for your financial circumstances and tolerance for portfolio risk, you may miss out on the opportunity to earn hundreds of thousands of dollars in investing profits over your lifetime.
- Advertisement -

. . . on the other hand . . .

  • If you invest more aggressively than your Risk Number suggests you should, you may become fearful as your portfolio value plummets during the next market downturn and sell your investments near the lows, cementing in significant self-inflicted financial damage.

How To Find Your Risk Number

You can find your unique Risk Number by answering a short series of questions that pinpoint where you stand on the risk-reward spectrum.

Are you a 32 or an 84? To find your Personal Risk Number in two minutes, please click below.

Once you know your Risk Number, you can compare it to the Risk Number of your actual portfolio to determine if you are taking the appropriate amount of investment risk. Many people consistently take more risk in their investments than they should, which is why so many sell out at the bottom of the market. (As a courtesy, if you take the Risk Questionnaire we would be pleased to determine the actual Risk Number of your investment portfolio.)

How Does Riskalyze Work?

To watch a 2-minute video about how Riskalyze technology works and how it helps investors to stay on track, click below.

Riskalyze Client-Facing Video from Riskalyze on Vimeo.

If you have any questions about how we use Riskalyze to craft portfolios that match the risk/reward levels of our clients, please email us at thoms@orioncapitalmgmt.com or call us at 619-435-1701.

-----
Do You Value The Coronado Times?
Become a Paid Supporter

Keep it civil. Comments may be removed or closed if they violate Terms of Service.

Advertisement

LETTERS TO THE EDITOR

Historic City Council Accomplishments Improve Coronado

Submitted by Richard Bailey, Mayor, City of CoronadoAs we work collectively here in Coronado, throughout the region, and at the state level to address...

4th of July Heritage

Submitted by Ch, Col (ret) Gary J. ZiccardiI am a Coronado resident since 2016 who served as Navy Surface Warfare Officer for 4 years,...

Chief Kaye’s Compassion and Kind Actions Stand Out

Submitted by Carolyn RogersonWe never know when a dire emergency will strike our lives. When such a crisis confronted Coronado visitors Mike and Jan...

Congratulations Coronado High School Class of 2020

Submitted by Gene Thomas GomulkaOne should not be surprised that the San Diego County Health Department issued a cease and desist order in regard...

NEW STORIES

Coronado Welcomes USS Theodore Roosevelt Home From Deployment

USS Theodore Roosevelt (CVN 71) returned to its homeport at Naval Air Station North Island in Coronado on July 9th, after completing a challenging...

Barbara Haines (1929-2020)

 Coronado lost a very special friend last month. Barbara Haines died June 10, just a week before her 91st birthday. She was the oldest...

Multiple Restaurants Temporarily Close as Workers Test Positive for COVID-19

Update (7/9/20):  The Henry and McP's Irish Pub are back open.Three Coronado restaurants have temporarily closed due to staff members testing positive for COVID-19....

Tracking COVID-19: 63 Total Coronado Cases Since March – Plus San Diego Stats

7/8/20 Editor's Note:  The County of San Diego confirmed that at least one death has been attributed to the 92118 zip code.  The story...

Dine-In Restaurants, Other Indoor Activities to Close

Beginning at midnight tonight, indoor dining at restaurants, bars, breweries and wineries will close for at least three weeks, after San Diego County remained...