Market volatility. A change in your time horizon. Different goals. All these things can affect the amount of risk you feel comfortable taking with your investments. Your ability to tolerate risk influences the investment choices you make and may have a significant impact on your success in achieving your financial objectives. Periodically revisiting your risk tolerance is an important step in the portfolio review process.
A MOVING TARGET
Your feelings about risk may change depending on what the markets are doing. During a prolonged period of market volatility, you may find your comfort level dropping, even if you previously thought you had a high tolerance for risk. If you’re a conservative investor, an extended market upswing may have the opposite effect, encouraging you to take on additional investment risk. In either case, basing investment decisions on market behavior instead of a well-thoughtout investing strategy isn’t the best plan. Instead, take time to reassess your feelings about risk. If they’ve truly changed, adjust your strategy going forward to reflect the changes.
MORE THAN A FEELING
How much money could you afford to lose if investment values dropped significantly? Your ability to accept risk also depends on your financial circumstances and your time horizon for tapping your assets. If investment losses would leave your finances in jeopardy and you have a relatively short time frame before you’ll need your money, your capacity for taking risk may be limited. Make sure you consider your risk capacity in your review.
A REALISTIC VIEW
A long period of either strong or weak market performance may convince you that the current trend will continue indefinitely. Perceived risk is how much risk you think an investment holds. However, your perception of an investment’s risk might not match its actual risk. In that case, you could be taking more or less risk than you should to remain within your comfort zone and still reach your goals.
Our team of highly respected and credentialed wealth management professionals can help you reassess your risk tolerance along with the level of risk in your portfolio. At Sabadell we believe that to develop and execute the most successful and well suited plan, it is critical to have an intimate understanding of a client's financial picture, lifestyle, long- and short-term objectives, preferences and interests. Once a plan is determined, we will apply our processes and resources to design a customized portfolio. Our wealth management offering includes objective and third-party manager solutions, traditional-equity and fixed-income management, and other sophisticated investment vehicles.
Dwight Hill is President of Sabadell United Bank. Hill has over 35 years of financial advisory experience and will continue to strategically position the bank for future Florida growth while maintaining connection with the historical business of the bank and its values. Hill can be reached at firstname.lastname@example.org or 305.808.2223.
Sabadell United Bank is expected to merge with and into IBERIABANK on July 31, 2017 and will continue to operate under the Sabadell United Bank name until the fall of 2017. IBERIABANK is a United States-based bank that will be approximately $27 billion in assets following this merger. The name IBERIABANK is derived from the city in which it was founded in 1887 – New Iberia, Louisiana. Company stock is traded under the symbol IBKC. For more information about IBERIABANK, visit www.iberiabank.com.