Wednesday, August 12, 2015

Managing Our Investment Risk

With the recent volatility of the U.S. stock market, I decide to revisit how we are managing our retirement investment risk.

My simple qualitative measure is whether i would be relatively free from worry in the event of a major market downturn.  In 2007, I gave an unequivocal yes as the answer.  However, during the 08/09 bear market, I was far from worry free.   I had too much invested in my company stock and not enough cash reserves in our accessible funds.

My answer today is a qualified yes.  Yes,  mainly because we've significantly increased our cash reserves, which we didn't do in 2007. Qualified due to my continued exposure company stock, even though I've greatly reduced the amount and reinvested the proceeds in a diversified stock portfolio.   Unfortunately, some of my company stock will need to be sold in the next two years, no matter what the price.   Hence, the possibility of higher worry during a near term bear market.

So from a risk perspective, we're better than in 2007 but not as good as I hope we will be in 2018. If we are lucky, the current bull market may last for three more years.:-)

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This is not financial advice. Please consult a professional advisor.

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