As Seen in Forbes: Why Investors Should Focus On Fees and Risk, Not Real Rate of Returns
April 6, 2020
According to Forbes, transparency is of the utmost importance.
The shorter the time period when you will begin drawing income from your portfolio (i.e., your time horizon), the more important a risk-focused approach becomes. Think of risk as your pain tolerance to lose money over short periods of time, understanding that the longer your time horizon, the greater your probability of positive returns. Time reduces the risk associated with investing in a well-diversified portfolio, and volatility simply becomes noise over the long run (i.e., 10-plus years).
There are two primary elements to concentrate on:
Fees: Given the often-significant effect of investment-related expenses, take the time to understand your costs and benefits. While virtually impossible to command your short-term returns in the stock market, you can control your costs.
Risk: It is important to align your risk tolerance with your age, time horizon, and other goals to help determine your appropriate asset allocation into stocks, bonds, cash and other assets. Other investors might look at multiple asset classes to diversify even further, such as gold, real estate, managed futures, annuities, private equity, art, and collections.
To view the full article in Forbes, click here.
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