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5 Risk Factors to Consider Before Investing | Business

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5 Risk Factors to Consider Before Investing
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5 Risk Factors to Consider Before Investing


Many people know how beneficial investing can be, in the long run. Yet we live in a time when our economy has people more fearful than they have usually been. One of the biggest things that holds people back when it comes to investing is fear. The idea of investing something without knowing what the return will be, or if there will even be one, can be daunting. Overcoming those risk-factor fears is a key to succeeding as an investor.

“It’s important for people not to let fear paralyze them from taking action,” explains Brad Glickman, CERTIFIED FINANCIAL PLANNER TM Professional, and President of Bernard R. Wolfe & Associates, Inc., a company that specializes in offering wealth management strategies. “Investing, or even not investing, based on emotion will likely result in failure. It is important to keep investing in some fashion, even if you are fearful of our current economic times. You simply need a disciplined plan for diversification1 to help you meet your goals.”

The more potential investors know about the risk factors and how to address them, the more likely they will be to move forward with a plan for investing. Here are 5 risk factors to consider before investing:

1.    Understand the three elements to investing. Each investment contains levels of risk, return, and liquidity. It is almost impossible to have low-risk, high return, and high liquidity all within any one investment. Be aware of which element you are sacrificing when looking at your individual investments.

2.    Identify the types of risks. Not knowing the risk factors can be a major risk in itself. The last thing that someone wants is to be blindsided. Some investments have interest rate risk, while others may have credit risk or some macro-economic risk. Be informed as to what type of risk each investment may contain.

3.    Figure out your true risk-tolerance. After a steep decline, how an investor handles that can indicate what their true risk tolerance is. Looking back at 2008 and how one handled that decline can indicate the appropriate level of risk for an investor.

4.    Identify how much you should invest short-term vs. long-term. Analyzing emergency cash reserves and short-term expenditures is a good starting point for accessing how much you can comfortably invest, long-term. Assets held inside retirement accounts may not be needed until further down the road. This means it may make sense for longer-term or more volatile investments to be held in these accounts.

5.    Being penny-wise and pound foolish. Not working with a professional simply to avoid paying a fee can result in more loss further down the road. Professionals can provide knowledge and objectivity about the risks that are appropriate for you and your portfolio.

“When you work with a planner, they can help you evaluate the risks of your investment opportunities,” added Glickman. “It is best to go into investing with your eyes wide open, and with an understanding of everything that is involved. Working with an adviser means that your investments will be tailored to your personal goals and risk tolerances.”

Bernard R. Wolfe & Associates, Inc., has provided financial management strategies and investment services since 1981. They assist a wide range of private and corporate clients with everything from estate planning and investment to divorce planning. The company also offers professional women’s financial planning services, led by Samantha Fraelich, a CERTIFIED FINANCIAL PLANNER TM Professional.

About Bernard R. Wolfe & Associates, Inc.

Bernard R. Wolfe & Associates, Inc., founded in 1981, provides wealth management strategies and institutional investment services. The company is led by a team of CERTIFIED FINANCIAL PLANNERS TM Professionals who have over 60 years of combined years of experience in the field. The team of professionals provides knowledgeable financial planning guidance to a diverse range of personal and corporate clients. To learn more about Bernard R. Wolfe & Associates, Inc., visit the website at www.bernardwolfe.com.

Securities and Investment Advisory Services offered through NFP Securities, Inc. Member FINRA/SIPC.

1 Using diversification as part of your investment strategy neither assures nor guarantees better performance and cannot protect against loss of principal due to changing market conditions

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