- Do I have the right percentage of stocks/growth?
- If I were to do it all over again and go back in time, would I have the same % stocks, same strategy?
- When you achieve desired recovery, what will you change?
- Actual alignment with Buckets and Tools approach?
- If I were to do it all over again and go back in time, would I divide all my money up accd to BAT approach, would I do put a different percentage?
- When you achieve desired recovery, what will you change?
- Is my strategy/tool effective against loss/risk?
- If I were to do it all over again and go back in time, would I use a different approach to manage risk of loss?
- When you achieve desired recovery, what will you change?
Sometimes, negative events are good for us. They can help us define and refine our thinking about what is working and what is not working..
That can certainly be the case for anyone’s investment strategy as it relates to the current pandemic and its impact. In some sense, it represents a worst-case scenario “stress test”.
Even though we can’t go back in time and change our investment strategy , we can use a thinking process to determine how we might change it once we get back to pre-pandemic investment levels.
I think for many investors, considering the risk of loss has not been top of mind since it has been more than 11 years since there has been a significant correction or bear market . We may have lulled ourselves to sleep thinking that our investments would continually go up year after year .
If you could go back in time to February 19th, 2020 and change your investment strategy…what would you change? Answering that question gives you insights into your true tolerance for risk as an investor and which tools may be more appropriate moving forward.
Many investors may answer the question that they would reduce the risk of loss or the amount of volatility in their investments. If that is the case consider some of the following options for the future.
- If the only investments available to you are stock and bond mutual funds, such as a company retirement plan (and you are under the age of 59 ½) , you can consider increasing the total number of bonds funds or funds that are not correlated to stocks
- If you are still working but over the age of 59 ½ , using an in service rollover provision within the company retirement plan will allow you to move your current balance to a self-directed IRA account in which you have thousands of other options, including those with less risk, even complete principal protection.
- Once you are in your own self-directed IRA account , the current marketplace has a multitude of strategies that can control downside risk . Options exist that completely protect principal . Options exist that allow you to define the precise amount of loss that is possible. Most importantly, options exist that are not tied to the stock or bond market at all. Some even can grow when the stock market is down.
You can definitely use this economic challenge for good by asking the question, if I could go back, would I change anything….then act on the answer.
If you have any questions, please feel free to contact me.
