Building a Better Investment Portfolio:
Assessing Intangibles Like Investor Temperament Helps Drive Allocation Decisions
Every investor is unique. Every investor has different goals & time frames. Every investor deals with day to day volatility differently. Some investors generate significant angst watching daily market swings which generally forces them to make poor choices at pivotal times. Others are able to keep their emotions under control, see periodic sales as opportunities to add more exposure with the understanding that large, short-term swings tend to create the set-up for better long-term outcomes. The trick is to “know yourself.” After 30 years of investing, I have realized that each investor has a theoretical risk/pain tolerance and an actual risk/pain tolerance. Most investors say they will not be affected if their assets fall by 10%+ and they will take advantage of the sale by adding more capital at better prices yet many will be too emotional to stick to that commitment when the time comes. Understanding your REAL risk tolerance and investment temperament will help you build the most prudent portfolio so you have the best chance of meeting or exceeding the goals you set in the beginning of your journey. To that end, we invite you to spend a few minutes answering vital questions that are required to help you build a prudent, institutional-caliber portfolio which includes the mix of assets and the split between private assets and fully liquid, public assets.
Here’ s what we know with decades of data and experience:
Institutional investors, often called the “smart money” tend to outperform individual investors (DIY and advisor driven).
