Did You Remember to Set the “Autopilot”?

| August 23, 2016
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BREXIT is now a fierce reality which may produce months, if not years, of market volatility until the uncertainty of the effects of the U.K.’s exit from the European Union materialize.  This event was proceeded by 2 of the “captains” of billion-dollar investment funds, Carl Icahn and George Soros communicating over the last few months to “passengers” the possibility of turbulence ahead.  Now may be the time to consider the use of setting an autopilot on your investments as you head into the later days of summer, with vacation and relaxation being a greater focus. Rather than depending on chance in volatile times such as these or in riding out the peaks and valleys of a purely passive investment strategy, you may want to incorporate a greater use of technology and strategy in the management of your investments in addition to traditional common practices.   

  1. Establish your risk/reward profile, set up the asset allocation for the goal you are attempting to accomplish and look to rebalance to the percentages of each asset class, (stocks, bonds, cash, etc.) that may best suit your needs.  As your needs or risk tolerance change, modify the asset allocation and the rebalancing criteria.
  2. If you are waiting to buy a position that trades actively and you have the cash available for it, consider a discussion with your financial advisor in the use of limit orders so that the buy could be executed without you having to constantly monitor the price.  The opposite applies for positions you may wish to sell and the use of “stop-loss” limit orders.
  3. Revisit your asset allocation at least annually and make sure your investments reflect your sentiments and are “programmed” through systematic investments and automatic rebalancing to reallocate to your intended percentages on a periodic basis.

In the case of investment strategy as in many other facets in life the wisdom of Benjamin Franklin may be a great adage to adapt: “An ounce of prevention is worth a pound of cure.”

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