It香蕉视频直播檚 easy to be confident in your investment approach when the markets are primarily going up.
But what happens when you add a little volatility to the mix?
香蕉视频直播淢arkets have gone up by more than 250 per cent since the last recession, with very little volatility until recently. This is not normal 香蕉视频直播� people have forgotten what normal volatility feels like,香蕉视频直播� says , a Kelowna-based financial advisor with Raymond James. 香蕉视频直播淧eople have become complacent in their risk tolerance assessments.香蕉视频直播�
The problem with emotion-based decision-making
Complacency can lead to emotional decision-making when volatility does happen, and that香蕉视频直播檚 when investors make the biggest mistakes.
Investors feel most at ease with investing when news is good, usually at the top of the market, and feel the most fear about investing when news is bad, usually at the bottom of the market. Giving in to these fears and allowing them to control investment decision-making can result in very poor investment performance.
香蕉视频直播淢oney is emotional, so it香蕉视频直播檚 natural, as humans, to allow emotions into the equation, but approaching investment decisions from a place of fear or greed is how we can make bad decisions,香蕉视频直播� Wilson says.
High risk doesn香蕉视频直播檛 always equate to high returns, and those who get caught up in fads or buying the 香蕉视频直播渟ure thing,香蕉视频直播� can put their investment portfolios at risk. 香蕉视频直播淚 know of investors who have lost everything because they heard about the stock of a company that香蕉视频直播檚 香蕉视频直播榞uaranteed香蕉视频直播� to go up,香蕉视频直播� Wilson says.
Is your retirement plan too risky?
For those nearing retirement, this long period of growth 香蕉视频直播� and resulting complacency 香蕉视频直播� may have led to investment plans that carry considerable risk.
香蕉视频直播淚 believe that many investors, especially those close to retirement, have too much risk in their investment portfolios, and that香蕉视频直播檚 happened because the markets have performed so well over the past decade,香蕉视频直播� Wilson reflects.
Assessing someone香蕉视频直播檚 risk tolerance 香蕉视频直播� and ensuring it香蕉视频直播檚 reflected in their investment strategies 香蕉视频直播� is difficult when markets are only going up, especially when an advisor hasn香蕉视频直播檛 been through a full market cycle themselves, or experienced a recession.
香蕉视频直播淭his is why you should work with a skilled, trusted advisor who has a significant amount of experience and education, and preferably one who works for an independent wealth management firm without targets for selling proprietary investment products. The clients香蕉视频直播� best interests should always be the advisor香蕉视频直播檚 No. 1 consideration.香蕉视频直播�
The core values of Raymond James and their advisors are conservatism, client-first, and integrity. This is reflected in the level of service their client香蕉视频直播檚 experience.
香蕉视频直播淢y team and I have a process which focuses on prudent risk management through financial planning. This is the blueprint for our investment strategy decisions. During times of heightened market volatility, our clients have a lot of peace of mind in our investment strategy and their financial well-being.香蕉视频直播�
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Tanya Wilson is a financial advisor with Raymond James Ltd. Information provided is not a solicitation and although obtained from sources considered reliable, is not guaranteed. The view and opinions contained in the article are those of the author, not Raymond James Ltd. Raymond James Ltd. member of Canadian Investor Protection Fund.