At Family Wealth Management, what we want individuals to do is seek to identify, understand, and manage risk by focusing on investment vehicles that offer a higher potential for lower volatility, better downside protection, and consistent compensation for the risk they are taking. People are not often focusing on lower volatility and downside protection. They’re just focusing on higher potential return, fueled by emotions or quick reactions.

Market analysis over the past century has shown that extreme changes in investment markets represent only about 3 percent of the time line*. What has made money for investors in very good markets has happened only 3 percent of the time and what created catastrophic losses also happened only 3 percent of the time. But, when those times hit, emotions run high and mistakes can be made due to those emotions and desired market performance.

That’s why it is important to work with an advisor who will work with you to help avoid this potential mistake and keep your emotions from getting the best of you. People sometimes panic and pursue high-risk interest rates, believing that is their only choice if they are to survive. It’s not the case. If you have a written retirement income plan, you will be able to see that.

*White Paper by Aftcast in 2010 titled “Lifelong Retirement Income: Cost of Excluding Variable Annuities”