"Each of us has to determine how much risk we are willing to bear in the hope that a desired return will be realized. There’s a wisecrack in the financial planning community: Either you eat well or you sleep well. Eating well takes money, and that means accepting some degree of risk. But risk can bring anxiety of the sort that wakes you up at night.”
--George Kinder--The Seven Stages of Money Maturity

Investing is a means to an end. Primarily, investments are stocks and bonds and real estate, which should be diversified so the highs and lows are smoothed out. A Nobel Prize in Economics was given when this strategy proved to have the best chance of long-term success. If your goals include needing money to accumulate over time, then there’s going to be a larger stock component in your portfolio. If you want less risk in your investments, there’ll be a larger bond component. But, in any case, it’s important to have sufficient diversification. The amount of risk you are willing to take does not impact the financial markets and may have to be adjusted to increase your chance of success in retirement.

Steve Margulin says, “Risk tolerance is not symmetrical. I have learned that people’s joy of gaining 15 percent is not as high as the disappointment and fear generated by losing 15 percent. My knowledge of the client is crucial in evaluating the answers generated by industry risk tolerance questionnaires.” There are many options in regard to risk, including lowering the rate of return required from investments, working harder to earn more, saving more, or waiting longer to retire. The best solution for peace of mind is to have a portfolio that matches your risk-return profile, so that you can stop worrying.

If you work with Steve, he won’t take control of your investments—you always have the final say. But, he will make specific recommendations on purchases and managing your investments. He has all the same licenses as the salesmen at the large stock brokerage firms, but, because he is independent, he has no ties or alliances to anyone but his clients. He is always looking out for your interests and what is best for you. You pay him an annual fee, which is usually a percentage of your money being managed, so that there are no conflicts of interest. He takes his responsibility to work in a fiduciary manner very seriously.

Steve keeps tabs on what’s happening in the economy and in the world to know where the most advantageous places are for you to be invested. And, in order to be the best advisor he can be, he keeps up on the latest in the financial world and attends conferences on investments, taxes, estate planning tools and strategies, stock options, and seminars that present diverse opinions from many experts.

But, since he can’t know everything, Steve calls upon a network of experts. He researches good investment pickers and hires them to manage segments of your money. And then he monitors the managers. He wants to see how they’re doing compared to their peer group and see that they’re doing better than most and why.

Whether Steve and his team construct a portfolio of mutual funds in a fee-based account (load waived and no-load funds), use individual stocks and bonds in separately managed accounts (SMAs), or low-cost exchange traded funds (ETFs) in a core-satellite strategy, you’ll get a well-thought-out portfolio designed specifically for you.

When you invest, you may have a number in mind that you want as a rate of return on your investment–say 10 percent. If your stock portfolio does better than ten percent, you feel good. But it could be that the average stock portfolio did 35 percent, so if you did 10 or 15 percent, your investments really paled in comparison. * You shouldn’t focus on a particular number. It’s how you do relative to the economy that matters.

You can’t expect the markets always to react in a certain way. There are going to be short-term fluctuations in the market, but, over the long run, markets are fairly efficient. What’s important to your long-term success is “rebalancing.” This means taking from financial markets that have succeeded in the recent past and reallocating into areas that have under-performed, which is a form of buying low and selling high. It comes down to monitoring your investments and keeping them working.

Getting rich is a long-term process.

* These figures are hypothetical and not representative of any particular investment. The stock market involves risks, including possible loss of principal. Positive results are not guaranteed.