Does your investing style preserve or perform?

Sunday, March 5, 2017|Managing Investment Risk|
  • Does Your Investing Style Preserve Or Perform

Many investors tell me they want the highest returns for the least risk. However, savvy investors know that to be a myth.

A periodic reassessment of the facts is time well spent for every investor. One where plenty of frankness prevails.

For example, step back and revisit your investor style. Rethink if it truly fits the financial goals you seek.

My question heads to the point: “What drives your investing style: Preserve or Perform?” Let’s define these two types:

Preserve investors care first about the risks they incur. They lean more toward capital conservation manoeuvres.

Perform investors seek high returns with far less or no concern for risks. They prefer more exciting aggressive strategies.

My observation is that the majority of investors are clearly driven and sold by performance. Their exuberance too often chases fleeting past performance, a mugs game at best.

Wise investors know that some portfolio preservation is desirable strategy. However, potential performance simply has far more cachet and always will.

Every family needs to find their acceptable investing balance. That is, between becoming too conservative and throwing caution to the wind.

At the end of the day, it’s the risks you take that deliver your returns. It’s always prudent to set or rethink your profile vis-a-vis your goals.

Establishing your true investor profile is both an art and a science. Personal risk tolerances and time horizon are two major influences.

Long-term investor profiles are a state of mind based on personal needs and comfort. Here is my overview of six profiles representative in managing today’s portfolios:

Investor Profile Sample Asset Mix Targets Typical Age Group Potential Return/Year
Stocks Bonds & Cash
Preservation 20% 80% 70 plus Up to 4%
Income 40% 60% 60 plus 4% to 6%
Balanced 50% 50% 40 to 80 5% to 7%
Growth 60% 40% 30 to 70 6% to 9%
Aggressive 80% 20% Up to 50 10% to 15%
Speculative 100% 0% Up to 40 15% plus

Always understand and take control of your investment risks. Your answer to my question dramatically affects the way you invest.

Adopting a prudent risk management profile is your priority one. It helps create a smoother path toward your financial destination.

About Adrian Mastracci, Discretionary Portfolio Manager, B.E.E., MBA  My expertise in the investment and financial advisory profession began in 1972. I graduated with the Bachelor of Electrical Engineering from General Motors Institute in 1971. I then attended the University of British Columbia, graduating with the MBA in 1972. I have attained the “Discretionary Portfolio Manager” professional designation. I am committed to offering clients the highest standard of personal service by providing prompt, courteous and professional attention. My advice is objective, unbiased and without conflicts of interest. I’m part of a team that delivers comprehensive services and best value in managing client wealth.

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