Money Talk

Is Your Portfolio Too Risky?

Is your portfolio adequately diversified to match your tolerance for risk?  Even if you have been fortunate enough to enjoy strong returns in the past, you may want to periodically review your portfolio to make sure your assets are properly diversified.

In order to diversify their portfolios, investors typically start by allocating their assets into three classes: stocks, bonds, and cash.  However, additional diversification is often needed in order to experience less volatility in a portfolio.  For example, simply having your investments divided between stocks, bonds, and cash may be a problem if all of your assets are tied up in one or two companies or industries.  Spreading your investments across a variety of sectors (such as technology, pharmaceuticals, financial, etc.) can further diversify the assets.  By doing this, your portfolio may not suffer as severe of an impact should one specific industry experience turmoil.

In addition to taking advantage of the wide range of sectors to choose from, investors can diversify their funds according to market capitalization (large-cap, mid-cap, and small-cap) and style (value versus growth).  If an investor were to have a majority of their assets tied up in small-cap growth funds, for example, this may be too much risk for their personal tolerance.  It may be better to spread their assets out among large-cap and small-cap growth and value.

Your own personal diversification strategy will depend on your tolerance for risk and long-term goals.  Diversification does not ensure a profit or protect against loss.  To find out if you’re properly diversified, contact your investment professional today.

Sal Favarolo is a Financial Advisor with Stifel, Nicolaus & Company, Incorporated, member SIPC and New York Stock Exchange, and can be contacted in the Hewlett, New York office at (516) 792-2248.

Are Your Beneficiary Designations Up to Date?
By Salvatore Favarolo, Financial Consultant

When you first set up your estate plan, you probably spent time customizing a plan that reflected your individual goals and family circumstances. Over time, however, your personal and family situation may have changed. That’s why it’s important to periodically review your beneficiary designations. The beneficiaries you selected may not reflect your current intentions.

Financial assets of various types — such as life insurance policies, qualified retirement plans, annuities, and individual retirement accounts — require beneficiary designations. If you have married, divorced, or had children since you named your beneficiaries, a change is probably in order. Failure to add a son or daughter as a beneficiary, or remove an ex-spouse, for example, may leave family members empty-handed after your death.

Keep in mind that a will generally has no effect on the distribution of assets that require beneficiary designations. Such assets will automatically pass to the individual(s) you have specified. If you don’t name a beneficiary, the assets typically will be paid directly to your estate. This could jeopardize your family’s financial security during the estate settlement period by causing unnecessary delays and expenses.

 This site is owned and maintained by Salvatore Favarolo, a Torrese born in Torre Del Greco Italy, as a courtesy
to the Order Sons Of Italy In America and the Constantino Brumidi Lodge.