Portfolio goals

“What the imagination can’t conjure, reality delivers with a shrug.”

—Trumbo (movie voice-over)

So, remember all those times we’ve said that investment risks and expected rewards are related?

Coronavirus-fueled fears, driving economic insecurities, aggravating a host of simmering global sore spots, spiraling into stomach-wrenching market sell-offs…

You know times are strange when you’re hearing from everyone – from the government to your local grocer – on what to do about the coronavirus. Believe it or not, we have a fresh perspective, which we think you’ll find helpful.

In recent days, the increase in volatility in the stock market has resulted in renewed anxiety for many investors. While it may be difficult to remain calm during a substantial market decline, it is important to remember that volatility is a normal part of investing.

Not long ago, some investors had yet to experience what it was like to weather turbulent markets. Even those who had, might have forgotten how scary it can be. This concerned us. So, to help people practice for scary days ahead, we published a fire-drill piece: “10 Things To Do Right Now While Markets Are (Not Really) Tanking.”

by David Booth, Executive Chairman and Founder, Dimensional Fund Advisors

By now, you’ve probably seen a few – or a few thousand – retrospectives on the past year and the past 10 years… with a few 20-year reflections thrown in.

Maybe it’s the nice, round New Year number. (Although technically, it may not be the dawn of a new decade until 2021.)

What a year it’s been. Remember December 2018? As The New York Times reported at the time, “Stocks plunged in December [2018], posting their worst monthly loss since the financial crisis and the worst December since 1931 and the Great Depression.”

The first decade of the 21st century, and the second one that's drawing to a close, have reinforced for investors some timeless market lessons: Returns can vary sharply from one period to another. Holding a broadly diversified portfolio can help smooth out the swings. Also, focusing on known drivers of higher expected returns can increase the potential for long-term success.

An Investment policy statement (IPS) is a statement that is a road map for you and your advisor in structuring your investments according to your goals. It spells out your investment goals and objectives, outlines the asset allocation targets, and the specific types of securities to be used with the expected risk/return profile of your portfolio.