Three Common Risks
We frequently see investors taking three unnecessary risks:
- Having no one oversee their overall allocation
People who have a trusted advisor managing their overall asset allocation have a significant advantage over those who don't. In fact, we're convinced that the largest contributing factor in determining portfolio performance is the asset allocation strategy, the principles used to guide the percentage of your assets that are in different types of investments. We have found that many investors have several different investment accounts that are being managed independently, thus there is not one overall governing asset allocation strategy.
- Having no one guarding against potential overlap in security holdings. Many investors assume that their investments are diversified because they have several different funds. But many investors may be experiencing more risk than they are aware of because many funds include the same particular stock, bond or particular asset class (i.e. small cap stocks, emerging markets, energy, etc.).
- No one is monitoring their plan.
It's never a good idea to put your investments on autopilot. Your plan needs to change as you do and perhaps as the markets do. Life changes such as having children, sending children off to college or nearing retirment can drastically alter the balance of how your plan should be focused.
If you're not using a financial advisor to keep track of your investments, you might want to consider doing so.
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