Formal Estate Plan

What Would Happen If You Lost Half of Your Wealth

April 29, 2014

pic_integrated_wealth_managementThere’s always one major goal in investment planning. For both financial advisors and their clients, the main goal is to watch the net worth of their clients increase gradually over time. However, the most worrying aspect of investment is the risk of losing a significant portion of the portfolio due to unforeseen events. Regardless of meticulous planning, there are situations that can severely damage the portfolio. Some of such financial catastrophes are:

Unpredictable Swings in the Stock Market
As per the Dow Joes 30 Industrial Average, the greatest single day decline in the stock market value happened on October 19, 1987; when the US Equity markets lost 22.61 percent of market capitalization. The dreadful loss of paper value could have been avoided if investors kept an eye on the long term goals, and refused to sell. Same thing happened during the recent financial crisis, as well. (more…)