Balance Your Goals

You should compare risk-return investment profiles to select the risk level you find most comfortable.

Are you willing to take on additional risk in order to boost your chance of increased investment returns?

The following bar chart depicts a model examplewhich estimates nearly a 7% chance of losing money over the next market cycle – direct your attention to the blue-red colored bar at the bottom of the bar chart – the investor has about a 7% chance of losing -1.50% per year.  The two highest chances are: about a 34% chance at earning 11% per year and about an 18% chance of earning 13.50% per year over the next market cycle.

Or do you prefer a lower risk tolerance with a more modest estimated investment return?

The following bar chart depicts a more risk-adverse valuation model which estimates nearly a 0.2% chance of losing money over the next market cycle – direct your attention to the green colored bar at the bottom of the bar chart.  Short of an outright guarantee, the investor has virtually eliminated the chance of losing money over the market cycle.  The two highest chances are: about a 42% chance at earning 3% per year and about a 52% chance of earning 4.50% per year over the next market cycle.

If you are not producing or your advisor is not producing this type of risk-return modeling for your investment portfolio, consider us.  We can show you various profiles and select one suited to your comfort zone.