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A Plan for Easing Your Worries

June 15, 2012 By Dina Isola Leave a Comment

It’s great to be aware of what is going on in the world, but if you find yourself so pre-occupied with the markets that you are wringing your hands and stressed out, it is time to meet with your financial professional, make sure you are on board with the strategy and then stop watching the day-to-day market fluctuations.

Not sure what to ask? Here are some points to raise with your financial professional:

  • What is my overall risk relative to the S&P 500? In other words, if the S&P loses 1 point, will I lose more, less or the same as that?
  •  What is my overall portfolio allocation? What percentage is in stocks, bonds, cash and what are the specific types of securities within these categories?  Are there any categories that should be included in the portfolio to help hedge against market fluctuations?
  •  What is the strategy going forward, if the market continues to be volatile? What types of holdings would be sold? What types would be bought? And, is the portfolio gradually shifting towards that new allocation?
  • What are the fees that I pay to own these investments? Fees eat into your performance and is the one variable you can control. Average fund fees can range from 0.50% to 1%. Of course, higher fees exist too, but the good news is there are many funds with fees in the 0.20% range as well.

Remember, nothing should be absolute in a portfolio. Selling everything and holding all cash (or any one type of investment) is an incredibly risky strategy. If an asset’s price is going up wildly, it is volatile and it’s price can easily plummet just as dramatically. There is no substitute for a well-crafted asset allocation strategy; just be sure you have one.

Filed Under: Blog, Financial Housekeeping, Uncategorized

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Dina Isola

Since 2002, Dina Isola has worked closely with investors, hearing their concerns. Drawing on her experiences and challenges, Real$martica was born, which focuses on making personal finance issues relatable to women, children and families and educating investors to make informed decisions. A contributor to A Teachable Moment, she is a client relations specialist at Ritholtz Wealth Management. She also serves on Stony Brook Children’s Hospital Task Force.

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