We always customize portfolios to minimize risk for each individual investor. Investing in stocks is also an element, but we avoid chasing unrealistic rates of return that open our clients up to unnecessary risk. As wealth architects, it is our responsibility not to over-accentuate the profit-side of investing to our clients. When you are making a decision about a financial risk, we are not going to temper your decision by thinking about returns. Instead, we want you to think about the ability for recovery in the event of a downturn.

This is where diversification comes in. For your assets that are in the market, you will want to make sure you have a safety net for when the markets fluctuate. But at the same time, if your investments are too diverse and spread out, you run the risk of not maximizing on returns over time. There are appropriate and inappropriate amounts—and ways—of diversifying, and it will be different for every person, and for each investment climate.

If you own company stock, you always have the option to rollover your shares. You do not have to sell them when you hit retirement. In fact, you have a couple options:

  1. You can, of course, sell all of your shares and reallocate your investments completely.
  2. You can also build in stop losses on just half of your shares, or all of them. Then, after doing this, you can reallocate your investments.

It is hard for working individuals who are accustomed to a degree of risk in their investments to fully comprehend how different investing feels once you retire. When you retire you are completely dependent upon the money in your accounts. Moreover, in retirement, there is not money coming into the account every two weeks, as before. Now, instead of relying on a contribution from your paycheck, all you have to rely on is your investment returns. Your perspective will reflect this: before, you were confident and not dependent on the money, and now you are dependent upon those assets and may be more risk-averse.

Because your retirement account is smaller, you stand to lose more in the event of a market downturn, so insurance on your investments might be a good idea. This way, you can guarantee an income for yourself so you do not have to go back to work if your account is depleted.

When it comes to protecting your investments—and your meaningful life—from potential risks, do not stop at asking, “How much do I stand to gain?” In the same breath temper your thoughts by asking how much you stand to lose as well. If you are confronted with an investment choice with a certain amount of risk, and the potential return appeals to you, consider the recovery. If you can handle the potential loss, then, and only then, should you feel comfortable taking that risk.

FOR MORE INFORMATION REGARDING HOW TO PROTECT YOUR ASSETS IN A MARKET DOWNTURN CONTACT MIRAMONTES CAPITAL.

Schedule an in office or over the phone consultation to discuss how Miramontes Capital can help you with your new beginning through retirement planning.


Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.