Use a Guide in the Investment Jungle

We often help our clients through an array of situations that involve uncertainty resulting in fear.  They are aware that there are risks that could foil their success in achieving all that they want for themselves, their families, and their communities at large.

However, most of the uncertainty is highlighted in two different risks that all investors must account and plan for.  This post will deal with these two risks by defining them and discussing how one may be able to reduce the uncertainty and fear associated with each.

People walking across a jungleHowever, just as if someone needed to pass through an unfamiliar jungle with all the potential pitfalls and uncertainties, most of the time it is unwise to try to attempt crossing the jungle by themselves.

There are significant advantages of passing this treacherous trek with an experienced guide who is familiar with the terrain and will ensure that the behavior of the people that they are guiding is appropriate to cross the jungle safely and without undue costs.

The guide would help lay out the potential pitfalls beforehand so that the travelers would be aware of the potential risks.  In addition, if the travelers were to come upon treacherous conditions, the guide would be in a position to determine if it was best to wait it out or try a new path to continue on with the journey.

So what are some of the “pitfalls” that people who are trying to supply a lifestyle sustaining retirement income or reach another financial goal need to understand about the investment process?  There are two risks that their financial advisor should make them aware of to help them avoid panicking at precisely the wrong time. Let’s explore:

1)  Investment Risk – ensuring that you have a well diversified portfolio of investments that will allow the investor- using historic rates of return – to reach their destination.  Just as a guide would insure they have a range of supplies in different tools to overcome the various twists and turns of the jungle so to should the planner use the entire global marketplace to create a varied portfolio.  In doing so, it helps reduce a major risk to achieving success – volatility.

2)  Behavioral Risk – Just as when the guide has laid out a path to successively pass through the jungle or the financial advisor has developed a portfolio that will reach their goals, that is only the very beginning of the process.  Once the plan has been developed, the advisor/guide then needs to work with his or her travelers to ensure that their behavior is consistent with successful completion.

In both cases a guide will work to ensure that emotions do not compromise the integrity of the portfolio or with a successful trekking through the jungle.  Managing ones emotions by staying focused is critical to the successful completion for both ventures – investing and a journey through the jungle .

So don’t let the “financial media” or so-called financial experts persuade you from making the trek to a successful pursuit of providing adequate lifestyle retirement income for you and your loved ones.  Work with an experienced guide who has not just considerable knowledge of the jungle but also has experience working with people to ensure that they successfully complete the trek.

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The foregoing content reflects the opinions of Crimmins Wealth Management and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee that any investment plan or strategy will be successful.

About Maureen Crimmins

Maureen Crimmins is co-founder of Crimmins Wealth Management and a fee-only independent financial advisor. Have a financial question? ASK MAUREEN


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