Keeping Perspective During Volatile Times
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“The views and opinions expressed in this article are those of the author and do not necessarily reflect the position of Pattison Media and this site.”
Recent market volatility has prompted some investors to rethink their perspective on risk. However, reacting to short-term market fluctuations is not usually advised. Instead, we continue to focus on the importance of having a plan in place with a view for the longer term, making prudent adjustments and rebalancing a portfolio where required. Here are some things to consider to help keep perspective during volatile times:
Why we rebalance portfolios: helping to avoid market timing —Rebalancing an investment portfolio involves adjusting the proportion of asset types to ensure it reflects your continuing goals. This is done because, over time, the value of the securities that make up your portfolio can rise and fall at different rates. Often, rebalancing involves trimming winners to get back to the target asset allocation level. One of the virtues of rebalancing is that it helps to take the emotion out of the investing decision-making process.
Don’t discount diversification — Diversification continues to remain an important tool in an investor’s portfolio, helping to manage risks and allow for more consistent longer-term results. Consider that a well-diversified portfolio often means that, by nature, the value of some components of the portfolio may fall when others may rise. The Kachur Wealth Management Group has access to private equity investments that have returned 11% annualized returns to clients the past four years and have no correlation to the stock market.
