RiskFebruary 18, 2020 -
Categorized in: IAG News
Winning isn’t everything. Sometimes surviving is reward enough.
Monday’s Daytona 500 offered a solemn reminder that to earn the checkered flag in a 500-mile NASCAR race requires taking a large amount of risk.
Ryan Newman experienced a fiery crash as he competed to finish the race in first place. Now we are all thankful that he is still alive.
NASCAR has invested millions of dollars in driver safety to prepare for crashes like this. Impact-reducing walls replaced concrete. The cars themselves have been redesigned to make high-speed crashes survivable.
Thankfully, investing is not nearly as dangerous to your physical health as auto-racing, but there are still crashes for which we must be prepared in advance (without spending millions of dollars).
All NASCAR drivers start the race with the intent of capturing the checkered flag. They are willing to take substantial risks to reach their goal. Aggressive investors tend to turn a blind eye toward risk and focus solely on the goal of the highest returns possible. They relish the thrill of “beating the market” and will take whatever risks are necessary to do so.
Prudent investors are different. For most of us taking a 500-mile road trip, our primary objective is to get to our destination safely within a reasonable timeframe. All investors must still accept some risks to reach their destination, but rational investors thoughtfully consider whether the risks are worthwhile or necessary instead of accepting them blindly.
Our clients already have their Portfolio GPSTM to guide them on their journey. With the stock market near record highs, now is a great time to sit down with one of our advisors to evaluate whether your investment plan is appropriate for your family’s goals. It is better to understand your risks before the next crash instead of after.
Quote of the week: Arthur Ziekel: ““Personal portfolio management is not a competitive sport. It is, instead, an important individualized effort to achieve some predetermined financial goal balancing one’s risk-tolerance level with the desire to enhance capital wealth.”
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through IAG Wealth Partners, LLC, (IAG) a registered investment advisor and separate entity from LPL Financial.
Past performance is no guarantee of future performance. In fact, the opposite can be true. The information contained in this report does not purport to be a complete description of the securities, markets, or development referred to in this material. Investing involves risk including loss of principal.
Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.