If you’ve ever seen it, it’s one of those things you’ll never forget – the mass migration of hundreds of thousands of wildebeest moving across the plains of Africa in search of a fresh feeding area. It’s magnificent to watch. Of course, we know why mammals herd together – it’s because there’s safety in numbers.
Perhaps the most important factor in formulating your investment plan is your risk tolerance; that is, the amount of risk you’re willing to assume in order to achieve your most important objectives. More precisely, your risk tolerance is based on your financial and emotional ability to withstand negative returns on your investment portfolio.
Any protection strategy that focuses only on insurance can leave you and your family vulnerable to the threat of a legal system which doesn’t necessarily share your objectives.
While the current stock market boom has some people rejoicing it doesn’t appear as though their level of anxiety has abated much. Investors sometimes have short memories, but a stock market rally is not likely to make people forget the carnage left behind in their 401(k) s and stock portfolios after one of the worst market declines in our history.
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