Do Your Investments Match Your Risk Tolerance?
Sunday, August 9, 2015
When was the last time you looked at the content of your portfolio? 
By Jose Yanez
   When turbulence hits Wall Street, are you stressed out? If you have taken on too much risk in your portfolio - which can happen through intention or inattention - stock market volatility may make you anxious. So from time to time, it is a good idea to review how your assets are invested. Your asset allocation should correspond to your tolerance for risk, and if it doesn't, it should be adjusted.   
A balanced portfolio may help you come out of stock market dips in better shape. Stocks and sto
ck funds aren't the only investment classes you can choose from, and you won't be alone if you decide to examine other investment options. 
Treasuries, bonds and bond funds may become attractive to investors when Wall Street turns especially volatile. Certain forms of alternative investments gain attention as well, particularly those with low or no co
rrelation to the equities markets. Bonds tend to maintain their stren
gth when stocks perform poorly. Some cautious investors maintain a cash position in all stock market climates, even raging bull markets. 
Downside risk can particularly sting investors who have devoted too much of their portfolios to momentum/expensive stocks. A stock with a price-earnings ratio above 20 may be particularly susceptible to downside risk.1
Underdiversification risk
can also prove to be an Achilles heel. Some portfolios contain just a few stocks - in the classic example, someone has invested too heavily in company stock and a few perceived “winners.” If a large chunk of the portfolio's assets are devoted to five or six stocks, the portfolio's value may be impacted if shares of even one of those companies plummet.  This is why it is wise to own a varie
ty of stocks across different sectors. The same principle applies to stock funds. If the S&P 500 corrects (that is, drops 10% or more in a short interval), the possibility grows that an aggressive growth mu
tual fund may dive.1
Are you retired, or re
? If you are, this is all the more reason to review and possibly even revise your portfolio. Frequently, people approach or enter retirement with portfolios that haven't been reviewed in years. The asset allocation that seemed wise ten years ago may b
e foolhardy today.   
Diversification or asset allocation does not ensure a profit or guarantee against loss; it is a method used to help manage risk.
Why not take a look into your portfolio? Ask a financial advisor to assist you. You may find that you have a mix of investments that matches your risk to
lerance. Or, your portfolio may need minor or major adjustments. 
The right balance may help you insulate your assets to a greater degree when stock market turbulence occurs.
Jose Yanez may be reached at 517-974-2238 or
This material was prepared
by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance 
needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All i
ndices are unmanaged and are not illustrative of any particular investment.
1 - fc.standardandpoors.c
om/sites/client/wfs2/wfs/article.vm?topic=6064&siteContent=8339 [5/5/14]
This column was printed in the July 26, 2015 - August 9, 2015 edition.

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