Managing Risk in Good Times and Bad
The S&P 500 had an amazing year in 2014. It had an annual gain of 13.7% and many investors were left wondering, “Why didn’t my portfolio do that well?” It is easy to get caught up in the good press the S&P 500 got and is continuing to get. The S&P is included in every standard news ticker on just about every source that reports any kind of financial news in the world. Many people will view the health of our economy and their investments on the level of the S&P, but that simply isn’t a true indicator, nor should it be.
If your portfolio was invested in a single index during 2014, such as the S&P 500 index fund, it is probable that you would have had a similar return. The problem with that strategy is a lack of diversification. It is important to remember that investing, especially investing for retirement, is a marathon that has to be paced correctly and evenly. The dangers of focusing too heavily in any one index are simple: if that index has an off year, you could be ruined.
It is important to not get bogged down with everything the media throws at you. A proper investment strategy should be customized to fit a diversification model that fits YOU. There are numerous factors that will fit one investor but not another. It is certainly not a “one size fits all” business! At Sound Financial Strategies Group, our financial advisors help you create the investment plan that is best for you and your situation. We want to help you be ready for the good times and the bad. Call one of our advisors today and let us help you navigate retirement and develop an investment plan that is tailor made for you!
Investment advisory services offered through Sound Financial Strategies Group, Inc.("SFSG"), a Registered Investment Adviser. Securities offered through Comprehensive Asset Management and Servicing, Inc., ("CAMAS") Member FINRA/SIPC. SFSG and CAMAS are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by CAMAS.
Indices are unmanaged measures of market conditions. It is not possible to invest directly into an index. Past performance is not a guarantee of future results. Diversification does not guarantee investment returns and does not eliminate risk of loss.
Posted on Fri, February 20, 2015
by Sound Financial Strategies Group