Frank Hubbard, humorist, cartoonist, and journalist had this insightful quote about growing your money and risk:
“The safe way to double your money is to fold it over once and put it in your pocket.”
As we get further into the summer season now is as good a time as ever to step back and think about risk.
As the Wall Street Journal reported today we have not had a 10% pullback in the S&P 500 for about 18 months. Some say that is too long, but in the 1990s we went seven years without a pullback that large!
Either way, if you are going to invest in stocks you have to accept that your money is at risk, meaning it can lose value. Without this risk you would not be compensated with returns that are higher than other less risky assets like CDs and U.S. Government Bonds.
If you want safety with no growth simply fold over your money once and place it in your wallet. However, if you want growth you are going to have to be willing to accept risk and that means 10% and higher draw-downs on your portfolio.
The fact that it hasn’t happened in some time only makes it more likely that it will happen sooner than later.
If you haven’t recently reviewed your investments you should contact your CERTIFIED FINANCIAL PLANNER™ Practitioner.