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Risk is More than Volatility
Almost any decision we make in life involves some level of risk – and that includes investment decisions. When most people think of investing risk, they think of volatility – how much and how often an investment’s value will fluctuate.
You could try to avoid risk altogether by keeping your money only in cash. While this may eliminate the possibility that your principal will decline in value, it also rules out the possibility that it will grow or keep pace with inflation. Choosing this route in an effort to avoid fluctuation exposes you to another risk: the risk that you will not reach your long-term investment goals.
Risk vs. Reward
To stay ahead of inflation and help ensure that your money lasts, your portfolio needs some potential to grow. However, you do not want to take on more risk than is necessary. The key is to determine what level of risk you're comfortable accepting and then balance it with the risk that is required to help you achieve your goals.
The amount of risk you can and should accept depends on many factors, such as your comfort level with risk, your stage in life and your overall financial goals. Your financial advisor can help evaluate these factors, determine appropriate levels of risk and offer solutions to help meet your goals.
An Added Level of Investment Management
You may want to consider an advisory program, such as Edward Jones Advisory Solutions®, which can offer an added level of investment management along with your financial advisor’s personal guidance.
Advisory Solutions includes a variety of professionally developed, diversified mutual fund and exchange-traded fund (ETF) portfolios called Research Models. These models are designed to address a spectrum of specific investor goals and risk levels. A team of analysts researches and chooses investments for the program, constructs portfolios in proportions appropriate for each specific objective and then manages those portfolios on an ongoing basis.
Risk is an essential consideration through every stage. While you can't avoid volatility altogether, Advisory Solutions works to help reduce volatility in the following ways:
- A diversified asset allocation – Different types of assets tend to perform differently in various environments. When one asset class isn’t performing well, another one may be. Including a variety of asset classes can help smooth out ups and downs.
- Rigorous due diligence – Funds selected for an advisory program must pass a meticulous review process, including an analysis of the level of risk taken to achieve the fund’s performance.
- Ongoing model review – Continuous monitoring of each Research Model and its underlying investments helps keep exposure to risk in check.
- Dynamic Threshold Rebalancing – Since asset classes tend to perform differently over time, rebalancing brings your portfolio back in line with your stated investment objective and risk profile.
Ask About Edward Jones Advisory Solutions
If you’re interested in the additional level of investment management, Edward Jones Advisory Solutions may be appropriate for you. Combined with your financial advisor’s personal attention, Advisory Solutions can help relieve you of the task of everyday monitoring and decision-making while providing a focus on reducing volatility in your investments.
Edward Jones is a dually registered broker-dealer and investment adviser. Edward Jones Advisory Solutions® is an asset allocation program that provides investment advisory services. Depending on a client’s minimum investment, a client can select Fund Models, which invest in affiliated mutual funds (if available), unaffiliated mutual funds and exchange-traded funds (ETFs), or UMA Models, which also include separately managed allocations (SMAs). Please review the applicable Edward Jones Advisory Solutions Brochure for more information.
The investments in Advisory Solutions, including money market funds, are offered by prospectus. You should consider the investment objective, risks, and charges and expenses carefully before investing. The prospectus contains this and other information that should be read carefully before investing. Your Edward Jones financial advisor can provide a prospectus, or visit our website at www.edwardjones.com .