Mike Palmer in MarketWatch - How Gains Can Impact Risk

Are You Taking too Much Risk in Your Investment Portfolio?

Ark Royal Wealth Management's founder Mike Palmer was quoted in the May 4th feature in MarketWatch addressing an elderly couple's changing risk appetite. The couple, ages 78 & 80, have a $3 million portfolio with a large percentage of holdings in technology.

"Remember that risk capacity and risk tolerance are two different things," says Mike Palmer, a CFP at Ark Royal Wealth Management. “Since your income covers expenses, you can assume greater risk with your investments,” Palmer says. “However, it sounds like your risk tolerance may have increased as your portfolio increased and that can sometimes be a bad thing. We advise clients to have an asset allocation that’s by design and one they can stick with in all market conditions.”

Further, periodic portfolio rebalancing back to the stated target allocation is a good risk management tool. “As the old saying goes, pigs get fat, hogs get slaughtered. Gains can indeed cause investors to lose sight of their risk tolerance,” Palmer says. Read the entire article here.