With financial opinions on every side, tech giants on the rise, and never-ending political noise, it can be hard to know if you’re invested in all the right things. You might be asking yourself, “Am I missing out on opportunities? Is my portfolio too risky? Am I in a good position for retirement?”
There are lots of variables to consider, and it can feel overwhelming. The good news is, navigating today’s financial markets isn’t as complex as some financial “experts” would lead you to believe. If you’re wondering whether you should be making moves in your portfolio, here are some things to consider:
Your portfolio should be designed for you.
That means your goals, risk tolerance, and timeline should be the drivers of your investment decisions—not whatever is happening in the market.
When we build a portfolio for someone, our goal is to help them identify what’s most important to them and structure their investments around that. We focus on diversifying to generate a strong return, but also to reduce their risk within the context of their unique situation. For example, if a client works in biotech and receives equities as part of their compensation, we might lower their exposure to other biotech companies so they’re not over-weighted in one sector.
Once we’ve designed a portfolio for a client, there are a few instances that require adjustments. Those include:
- Opportunities in the market: For example, when the market dropped 20% in April, we helped certain clients boost their risk allocation because their timelines allowed for it. Similarly, if an otherwise-well-performing stock or sector drops significantly, we’ll take the opportunity to buy in when prices are low. But these movements are in response to major shifts—not fluctuations of half-percentage points.
- Troubling developments: Our definition of “troubling” is a tight one. While CNBC may have you thinking that disaster is imminent and you need to be trading every day simply to stay afloat, true financial catastrophes—the kind that necessitate major alterations to one’s financial plan—are rare. In fact, it’s been nearly 20 years since the market was in a place where we thought it best to make wholesale shifts.
- A change in your situation: Any time something unexpected happens that might take you off the track to your goals—you get laid off, you’re diagnosed with a serious health issue, your kid needs an extra year in college because they didn’t quite focus the first four years—you should reach out to your advisor so they can help you adjust your strategies accordingly.
Beyond that, the most important thing is that you’re comfortable with the path to your goals and the risk required to get there. Oftentimes, our job as advisors is helping clients pull back and look at the bigger picture. We help you shut out the noise and recognize where you really are in relation to your goals and what position the markets are really in, with long-term context. This perspective sometimes means the difference in panic trading and a good night’s sleep.
And that peace of mind is what’s going to keep you on the right track—because if you’re not comfortable with your strategies, you’re not going to stick with them, and when you don’t commit to what’s intended to be a long-term plan, it doesn’t work. So instead of focusing on the what-ifs, focus on what you think is important and what you want to accomplish—and allow a trusted advisor to guide you there.