Balancing Investment Risk


What is my tolerance for risk? This is a very difficult question for many investors. In general, markets tend to provide higher returns in exchange for bearing higher risks. Often you will find that the investments with the highest long-term returns are very volatile in the short run. It is important to be honest with yourself in assessing whether you are comfortable with market volatility, and the level you can tolerate. While it is easy in hindsight to wish you had invested in a risky segment of the market that has performed well recently, a more realistic view is to look forward at the risk that might occur in the future.

Your advisor at Stapfer Financial Planning Group Inc. will work with you to understand your tolerance for risk, which is then used to develop an Investment Policy Statement (IPS). This IPS acts as the guiding document for setting up your investment portfolio. Part of this IPS will be the asset allocation recommendation for your portfolio.