If the latest bout of market volatility had you panicking about your portfolio, you may have been invested out of line with your risk tolerance, experts say.
Understanding risk capacity and risk toleranceFirst, a dip in your portfolio would materially affect the rest of your financial picture. That's called your risk capacity. If you're years away from a long-term goal, such as retirement, short-term dips in your portfolio aren't necessarily a very big deal because your investments have decades to recover.
Investing pros call your ability to stick to your financial plan in the face of investment losses your risk tolerance. It's fine to feel panicky when big red numbers start to fill your portfolio page, says Brad Klontz, a certified financial planner and financial psychology professor at Creighton University. But if you let that panic drive you to rash financial decisions, you could potentially do real harm to your finances, Klontz says.
Generally, younger people saving for retirement can invest that portion of their portfolio predominately in a broadly diversified array of stocks, Benz says. They offer higher long-term returns than other types of assets, but also tend to come with more risk. "If I'm not comfortable in this kind of up-and-down market, I need to remember that and put in protections so I don't feel this way next time it happens," says Kelly LaVigne, vice president of consumer insights at Allianz Life."Because it will happen again. And you'll feel lousy again."
South Africa Latest News, South Africa Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
MacBook Pro Users Face Unexpected Supply ProblemsNew MacBook Pro users looking to make the best of their new laptops may be in for a long wait, as a key peripheral is in short supply.
Read more »
RedMagic 7S Pro pre-orders are live: grab a coupon, get $30 off the final price!The RedMagic 7S Pro is now up for pre-orders - save $30 on a gamer phone with an actual cooling fan!
Read more »
Stacey Abrams says her faith in God guides her pro-choice stanceKENNESAW, Ga. — Stacey Abrams believes politicians shouldn't interfere with a woman's decision on whether to get an abortion, and her own religious faith has reinforced her pro-choice views.
Read more »
Why Therabody’s TheraFace Pro Is Worth ItThe multi-purpose tool tightens, massages, and provides light therapy.
Read more »
Opinion | Pro-Golfers Dirty Themselves By Taking Blood Money From Saudi ArabiaAsked how he could link arms with a potentate so barbarous as to have had a critic of the regime murdered and chopped into pieces, Norman said: 'Look, we've all made mistakes.'
Read more »
Installing Android 13 beta 4.1 fixes the fingerprint scanners on the Pixel 6, Pixel 6 ProInstalling the Android 13 beta 4.1 update on your Pixel 6 series phone will take the beleaguered fingerprint sensor to a new level.
Read more »