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Is Your Allocation A Good Fit For Your Risk Tolerance?

Monday, June 24, 2013 - 6:39 PM
From The Oblivious Investor:

      If you’re an investor who is new to the stock market and this is your
      first time experiencing anything other than the superstar returns that
      stocks have had over the last few years, there are two reasonable ways
      to respond to this recent decline:

      1. You could come to terms with the fact that this sort of thing is
         normal, and carry on with your plan, or
      2. You could decide that your chosen allocation is too risky for your
         actual risk tolerance, scale back your stock allocation, and count
         it as a relatively inexpensive lesson (less expensive, that is,
         than waiting until a full-scale bear market to learn the lesson).

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cumuluscumulus357 posts since
Jan 16, 2010
Rep Points: 1,657
1. Monday, June 24, 2013 - 7:01 PM
This stock down-turn is a good reality check.  People always think that they have a great risk tolerance during bull market and cannot seem to get enough of those hot stocks.  The cold reality sinks in when the stock market continues to go down every day and every month.  Then almost all investors claims zero risk tolerance and bail out in entirety at the bottom.  Pretty sad.
51hh51hh1,476 posts since
Jan 16, 2010
Rep Points: 6,427