Risk is an inevitable component of investing and market volatility is one of the factors that create investment risk. A large part of dealing with risk is working with an advisor who can help you manage your expectations and guide you through the ups and downs of a turbulent market. There is no single, universally correct strategy for risk. Every strategy is subject to subject to your individual financial life needs. Consultation with an advisor can help you understand what approach works best for your situation.
Beyond setting realistic expectations, here are 8 potential strategies — 4 long-term and 4 short-term — for managing volatility in your investment portfolio.
Investing experts used to advise removing all emotion from investment decisions. However, as humans, that simply isn’t possible. “Behavioral finance” is a discipline that studies how human beings actually respond to things like risk, volatility, and loss. For example, our grief over a loss is likely to be twice as strong as our elation over a gain. Understanding how we are wired as humans, along with our individual personalities, helps us choose risk strategies that support our lifestyle and peace of mind.
No strategy comes without risk. It’s a good idea to discuss your attitudes toward risk with a United Capital financial advisor who understands how important they are. Your advisor can help you manage investment expectations and risks in the ways that suit you best.
United Capital Financial Advisers, LLC d/b/a Goldman Sachs Personal Financial Management (“GS PFM”) is a registered investment adviser and an affiliate of Goldman Sachs & Co. LLC and subsidiary of The Goldman Sachs Group, Inc., a worldwide, full-service investment banking, broker-dealer, asset management, and financial services organization.
The information contained herein is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered investment advice. GS PFM does not provide legal, tax, or accounting advice. Clients should obtain their own independent legal, tax, or accounting advice based on their particular circumstances. Please contact your financial adviser with questions about your specific needs and circumstances.
Information and opinions expressed by individuals other than GS PFM employees do not necessarily reflect the view of GS PFM. Information and opinions expressed in this article are as of the date of this material only and subject to change without notice.
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