STAYING CALM THROUGH MARKET UPS AND DOWNS
This year’s extreme market volatility may have left some investors
second-guessing their financial plan and portfolio holdings. During market
upswings, they may have felt underexposed in the soaring growth and technology
sector. During market slides, like the ones we’ve just experienced, they may
have felt overexposed in these declining sectors.
Investors who have implemented a sensible financial plan were more likely to
be at ease with their investment decisions. The goal of a good financial plan
is, of course, to pair your personal needs and objectives with investments that
closely match your comfort level. Investments shouldn’t cost you sleep or push
you into checking prices everyday.
But when the Nasdaq plunges 25% in one week, as it did the week ending April
14, 2000, and the Dow Jones industrial average loses 7.3% in a one-week decline,
most investors take notice. Times of market volatility are, in fact, good tests
for an investor’s risk tolerance. How did YOU feel during recent market
turbulence? Take this quick quiz and answer honestly.
A sound financial plan designed to met your needs, seeks first and foremost,
to achieve an annual rate of return sufficient to accomplish those goal within
at a risk level that is within your comfort range. A properly allocation of
portfolio assets eliminates the wild swings in account balances that have been
evident in the recent past. The focus should be on the attainment of financial
goals, rather than an attempt to "beat the market".
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