Do this once a year to ratchet up your financial security | | | WED, MAY 15, 2019 | | | Hello, my name is Jim and I am a personal finance nerd.
I admit this because I want to explain the merits of individual investors stress-testing their portfolios. I know it's not something discussed at a dinner party, but I think it's a big deal.
Stress tests are computer simulation techniques widely used by institutional investment managers, regulatory authorities and portfolio managers to test the resilience of portfolios against possible adverse market scenarios.
With that said, investors also need to run a stress test to assess their own portfolio's ability to weather market gyrations. Here are some things investors should do: check your asset allocation; consider your sector exposure; check the liquidity of investments; and assess the costs for all your holdings. It may sound complicated and time-consuming, but it's really not. It just takes some commitment. It's your money, people, so why not put in the time and energy?
By checking these components, your portfolio will be better prepared to weather the next financial storm.
For more cool stuff like this, please follow me on Twitter @jimpavia and check out CNBC's Financial Advisor Hub and CNBC + Acorns Invest in You: Ready. Set. Grow. | Are financial advisors prepared for cyber attacks? | As cyber threats abound, everyone from large financial firms to individual advisors needs to make sure they have done everything they can to guard against a breach. That often means putting the systems that are already in place to the test. | | | Planning on growing wealth? Three steps to start investing | You don't have to be a millionaire to get your start into building a nest egg. In fact, the tools you need might be available to you at work. Douglas Boneparth, certified financial planner and president of Bone Fide Wealth, discusses where to begin. | | | Trade war fears prolong the bull market | "The stock market is more constructive for long-term investors when there is something to be worried about than it is at moments where all potential problems appear to have been vanquished ..." | | |
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