How Much Risk Are You Taking with Your Investment Portfolio?

All Investing Comes with Risk

We all know that equity markets go up and down. Some investors are much more comfortable market movement than others. Of course no one is concerned when their portfolio makes more money than expected. It is movement to the downside that is more problematic for investors. This tolerance for risk isn’t all that easy to explain much less quantify. Our human tendency is to be heavily influenced by what’s going in the current market.

Historical Perspective

Drawdown Threshold Historical Frequency Typical # Per Year
20% Once per market cycle (5-8 years) 0
10% Once per year 1
5% Once per quarter 4
3% Once per month 11
2% Often 18

Source: Standard & Poors, FactSet, J.P. Morgan Asset Management. Returns are based on price only and do not include dividends. For illustrative purposes only. *Analysis based on each type (size) of drawdown being independent. For example, the market does not typically see four 5% drawdowns and one 10% drawdown in the same year, but rather those 5% drawdowns may compound into a single 10% drawdown for the year.

Step 1 – Take the Risk Quiz

Take the Risk Quiz
Take the 5 minute quiz that covers topics such as portfolio size, top financial goals, and what you’re willing to risk for potential gains.

Step 2 – Get Your Risk Number

Take the Risk Quiz
Based on your responses to the five minute quiz, our software will pinpoint your Risk Number to help guide our decision making process.

Step 3 – Review Your Current Investments

Take the Risk Quiz
Let us run your current portfolio through a Risk Number calculation. We will need a statement showing ticker symbols and amount invested (in $ or percent). It turns out that 4 out of 5 people have more risk in their portfolio than they realized.

Step 4 – Align Your Portfolio to Match

Take the Risk Quiz
If you become a client, we’ll match you with a portfolio that aligns with your personal preferences and priorities. We use Riskalyze technology that allows us to make sure the Risk Number of your portfolio aligns with your personal Risk Number, allowing you to feel comfortable with you expected outcomes.

Step 5 – Stress Test Your Portfolio

Take the Risk Quiz
Stress tests illustrate how your proposed portfolio would have fared through various market events over the past 8 years, including the financial crisis and recovery so you can understand the potential market movement you should expect over time.

Step 6 – We Monitor Your Portfolio

Take the Risk Quiz
Your nest egg is important and nobody likes surprises. Somebody needs to keep an eye on your portfolio and you may not have the skill, interest or desire to do it yourself. If you become a Heritage client, we monitor your portfolio for risk exposure and rebalance as needed.