Raskin Planning Group

Are You Happy With Your Investment Portfolio Returns?

People often feel they need to review their portfolios at the beginning of a new year. When doing this review, they sometimes wonder why their return isn’t showing the same gains as the "market." Many investors want to take on more risk when markets are going up (hoping for greater returns) and then want less risk when markets go down (hoping they won’t lose as much). We like to remind our clients that the stock "market" can be violent in its reactions and experiences and therefore we recommend portfolios that include other types of investments that are less volatile. Clients that want to participate in market-like gains must expect market-like risk.

We encourage clients to stay with a strategy that is designed to help meet their long term goals:

  • Diversified strategies include different types of stocks and bonds that might not increase as much as the market.
  • Conversely, when markets are doing poorly, the value of the diversified portfolio may not decrease as much as the market.
  • Trying to time markets by buying low and selling high is very difficult to do successfully and consistently.

If you are reviewing your portfolio, here are some key points to remember:

  • The market consists of tens of thousands of securities and instruments from around the globe. Defining the market isn’t as easy as choosing an index like the Dow Jones Industrial Average (30 U.S. large company stocks) or the S&P 500 (500 U.S. large company Stocks).
  • Know what you are trying to accomplish: we help you choose investment strategies that help you with your lifestyle, risk and estate goals. Beating the S&P 500 may not be the most appropriate or realistic goal.
  • Have a sense of how much risk you’re willing to accept: historical returns over both up and down markets will help you understand what you might experience in the future. How would you feel if your portfolio dropped by $100,000, $200,000 or $400,000? How will this drop in value affect your current and future income objectives?
  • Stick with your chosen strategy unless your goals and objectives have changed. Don't change your strategy according to recent market performance.
  • The Raskin Planning Group recommends a comprehensive financial plan before restructuring a portfolio. Planning can take 3-6 weeks, but it is worth the effort.
  • Review your plan annually to make sure you are still on track. Make adjustments as necessary.

In the short-term, investing is not always a satisfying experience. If you currently have a portfolio, remember not to lose sight of your objectives. Your portfolio is likely structured with your long term goals in mind not based on short term market fluctuations.

Peter Raskin

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