With all the ups and downs we're seeing in the market these days, we realize many people might be feeling anxious and have questions about if they should be making changes to their investments. As you know, while past performance is no guarantee of future results, historically, investments in the stock market generally have a higher return over time than fixed-income investments. The downside to these higher returns is that stocks can also be more volatile over short periods and may lose substantial value. That’s what we’re seeing now. But it’s important to remember that one fundamental thing has not changed: You have to remain invested for the long term in order to earn the higher returns available in the stock market. This, in turn, we believe will maximize your probability of achieving your most important financial goals.
One way to help assess if you're invested properly is by comparing your risk tolerance to the risk of your investments. To do this, we utilize a software that assigns the potential range of returns within a six-month period - upside and downside - based on historical performance of a specific asset. It can then calculate a risk score to an account and to an entire portfolio. Although we focus on long-term investing, the software rationale is that most people get jittery during volatile markets and begin wanting to make changes to their investments within six-months regardless of their long-term plans. The software also provides a simple questionnaire for a person to complete to determine their risk score. We can then use these results as one way to analyze how a client's portfolio is positioned.
If you'd like for us to use this tool to review your risk levels, contact us and we will email the link for the questionnaire. It only will take you 5-10 minutes to complete. In addition, you will also need to send us statements of any investments you hold outside of Sherpa (e.g. current employer plans, accounts you're managing yourself, etc.).