November 11, 2013
Western New York is the birthplace of the chicken wing. It's always tempting on Sundays in the fall to grab a booth at our Monroe Avenue neighbor, Jeremiah's, and order a dozen wings in anticipation of the Bills game. However, I was not listing my favorite wing sauces in the title of this post; Instead, I was listing the types of risks that exist in a retiree's investment portfolio. As Financial Professionals, it is our job to consider the 'what if' scenarios and keep our clients informed of extreme, severe, and mild risks to their retirement savings.
Extreme risks involve another World War, asteroids crashing into Earth, or complete ecological destruction. Little time is spent considering these because if any of these occurred, the value of your most recent monthly statement would be the least of your worries. Severe risks deserve more attention, because they can be very detrimental to every investor. They could be a global trade collapse, terrorist attacks, or a natural catastrophe that creates immense volatility in all capital markets.
While you cannot completely control the market's impact on your portfolio through extreme and severe risks, there are things you can control to increase the longevity of your savings. The risks that you, as an investor, can control are mild risks. They are mild only in the sense that they don't affect the entire population as a whole; Instead, they are unique to each investor. Mild risks may be withdrawing too much money on an annual basis, or not being comfortable with the level of risk that you are taking. Ultimately, you need to be able to sleep at night and take comfort in the fact that your portfolio will last for the entirety of your life.
No one can control the extreme and severe risks, but take the time to sit down with your advisor and make sure you understand the inherent mild risks in your retirement savings. Make sure you are comfortable with how you are invested and allow us to consider the 'what if' scenarios, so the next time you are waiting for the Bills' game to start, your only concern will be if you picked the best chicken wing flavor.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).