Risk is everywhere, every day. But when it comes to your money, taking on too much risk can mean not reaching your goals. While there are some things we can’t control, such as natural disasters and political scandals that cause the markets to go haywire, there are certain steps we can take to reduce risk.
What Is Risk?
Risk is fundamental to investing. Even “investing” by hiding cash under your mattress involves risk since there’s always the chance of a break-in or increased inflation eating away at its value.
Some risks are avoidable, while others are not. Avoidable risks are those that take place when your portfolio holds too many stocks or bonds that have been unstable in the past or when your portfolio is not diversified enough. For example, you may hold too much of your company’s stock in your 401(k) plan or another account. Or you have too many overlapping U.S. stock mutual funds, instead of being more globally diversified. Avoidable risks often occur when we underestimate risk and believe we can tolerate more than we actually can.
Risk is also personal. Your risk tolerance is based on your unique circumstances, stage of life, and personality, so it’s not going to look the same as your sibling’s or your next-door neighbor’s. For example, when the tech bubble burst in 2002 and when the recession of 2007-2009 hit, everyone lost money, but many lost more than they should have because their portfolio did not align with their personal risk tolerance level and time horizon. We’ve been riding a high on the longest bull market in history, but we don’t know what’s around the corner. Now is the time to manage your risk so you can sleep better at night.
How We Can Help
You don’t have to live in fear of the markets. Setchfield Asset Management is here to not only help you grow your wealth but also protect and preserve your assets. We take the time to analyze your situation and understand your short-term needs, long-term goals, and risk tolerance. Once we have the foundation in place, we create custom strategies to help you pursue your goals.
If you want to set your portfolio up for success no matter what the markets throw at it, schedule an introductory meeting today by emailing me at email@example.com or calling (303) 627-1099.
Steve Setchfield is Chief Investment Strategist at Setchfield Asset Management, an independent financial advisory firm. With almost 30 years of experience, Steve serves his clients by keeping them out of financial trouble in volatile markets, using a low-key, rules-based approach to investing and helping them with every aspect of their financial lives. Steve studied finance at the Metropolitan State University of Denver and spent several years working at Shearson Lehman Brothers and Kemper Securities before founding his own independent firm so he could offer objective, personalized advice and strategies. Steve is a Colorado native and enjoys skiing and other outdoor activities. He spends his free time volunteering for Big Brothers/Big Sisters of Colorado and coaching wrestling in the Cherry Creek school system. In 2003, Steve was a living kidney donor for his uncle who suffered from polycystic kidney disease. To learn more about Steve, connect with him on LinkedIn.