Risk On / Risk Off

When you think of investments, there’s obviously thousands of different things you can invest in. But let’s talk about a couple different styles of investing. And that’s mainly from the management of it. Passive versus active. Simply speaking, passive is typically you put an investment in place. It can be any investment really. And it just stays the course. It’s invested whether it’s up or down or different. It just stays invested as you put it there. That’s a passive way to invest. Then let’s talk about active. Active means there’s changes going on for various reasons. The manager sets the reasons for those changes and it can be for different reasons. But today, let’s assume that’s for basically risk, okay? So specifically there’s portfolios out there with active management that kind of have this risk on, risk off approach. When fundamentals encourage or look positive, they tend to have more of a risk on approach. Meaning that the asset classes they’re picking from tend to carry more risk, therefore, hopefully carrying a better probability of higher returns. Risk off, that same manager sees fundamentals change out there and determine the portfolio needs to take a less risk approach. And typically investments invest in assets that carry a less risk. Something that maybe isn’t as volatile during certain times. Well why would a manger do this? Well think of it this way, they’re trying to effectively keep you maybe in the middle of the road. So when times are poor, economic conditions are poor, they want to have you out of the more riskier assets. Maybe the stuff that’s going to go down more. And when times are better, they want to try and take advantage of that and try to get some of that maybe that upside that’s happening. So as you enter retirement or you think from a different risk prospective for you, this potentially could be an option that’s out there. So do you know what management style you have in your portfolio? If you don’t, it’s a great question. And that’s when we come into play and sit down and walk through that with you. One, analyzing what you currently have and looking at what it is and how it fits. Asking those tough risk questions. You know what risks are your comfortable with? Every person is different and oftentimes throughout your life, your risk tolerance changes. In times when we see markets correct or be volatile, some people get a little uneasy in their stomach and that’s risk. You know, where is your comfort level? So having these discussions, seeing where different strategies can play a role, not only from an asset allocation. We talk about diversification, but also from a strategy prospective. What are they trying to do? What goals are you trying to accomplish? So in the end, we want to have you plan to retire well. And so when we build out these strategies, how does it fit for you and your goals so you can achieve that retirement dream you’ve so sought after. Give us a call at the number on the screen. We’d love to sit down with you, no cost, no obligation visit to walk through how this may be appropriate for you.