How to diagnose, treat the stress of the financial portfolio


“You have to manage your stress. “

How many times have you heard these words from your doctor or your spouse, or maybe you said them to yourself?

The problem with stress is that the problems it causes often lurk beneath the surface. It’s easy to ignore the effects of stress until it leads to a major health problem: high blood pressure, headaches, stomach problems, or even a heart attack. In addition, dealing with the consequences can cost precious time and energy.

Just like physical health, your financial health can also be threatened by stress. Your portfolio may appear healthy and flourishing, but without proper attention it could develop weaknesses that may not appear until economic conditions change or you experience a change in your life or retire.

One of these concerns is the market risk in your portfolio, which could put you at risk of significant losses if the market goes down. As stocks have risen in recent years, it has been difficult for investors to think of anything other than watching their account balances increase.

But all good things must come to an end, and if the market hits a major slowdown, retirees and future retirees may regret not protecting their nest egg by shifting their assets to safer strategies.

Another concern can arise when investors are unaware of the growth of money in their various investment accounts and how it will be taxed when they make withdrawals. Investors often set up accounts at different times in their lives and for a variety of purposes – an IRA here, an annuity there – until they are left with an assortment of assets that are not designed to work. consistently to achieve their goals.

Take your financial pressure

A financial “stress test” can identify these portfolio problems and allow you to generate a plan that helps avoid future financial problems. Here’s how you can diagnose and treat existing symptoms or potential problems:

Discuss your goals.

Every saver has short and long term goals. Maybe you want to explore early retirement. Maybe your goal is to work until age 65 and then travel or spend more time with your family. Understanding your goals is a crucial step in identifying potential issues in your current portfolio.

Examine what you have.

An analysis of your existing assets can help you get a better idea of ​​the stressors lurking in your portfolio and in your overall retirement plan. A healthy portfolio will feature a mix of asset types, balanced specifically to meet your individual goals. These assets typically belong to one of three “buckets”, each designed for a specific purpose. The buckets are:

  • Security: The assets in the safety bucket are protected and liquid, and they are meant to be accessible. They include items such as cash, savings and money market accounts and certificates of deposit.
  • Returned: The income bracket includes assets that can serve as a “paycheck,” providing money both now and in retirement. These investments must be reliable and able to exceed inflation. Income investments can include dividend-paying stocks, bonds, real estate rentals, or annuities.
  • Growth: These assets carry the greatest risk, but they are expected to generate the highest returns over time through capital appreciation and mix. Stocks, exchange-traded funds (ETFs) and mutual funds can offer portfolio growth.

Prescribe a plan.

After you have identified your current location and where you want to go, you can create a strategy to help close any gaps. This involves identifying the right mix of assets for your plan and realigning existing assets to relieve pressure points in your portfolio.

Avoid financial breakdown

Recent market volatility is a crucial reminder to be proactive with your financial health. Identifying and reducing potential sources of stress in your wallet is the best prevention against future problems.

Make your financial health a priority; don’t wait for an unexpected problem or hidden disease to force you to act.

Kim Franke-Folstad contributed to this article.

There are risks involved in investing, including the potential loss of capital. Any reference to protection benefits, safety, security, lifetime income, etc. usually refers to fixed insurance products, never securities or investment products. The guarantees for insurance and annuity products are backed by the financial strength and claims capacity of the issuing insurance company.

Founder, Goldstone Financial Group

Anthony Pellegrino is one of the founders of Goldstone Financial Group (, an investment adviser registered with the SEC. He is a trustee and holds a Series 65 Securities License and a License from the Illinois Department of Insurance. Anthony co-hosts the “Securing Your Financial Future ™” TV show that airs on CBS the Sunday morning after “Face the Nation”.


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