Imagine your friend buys a cow, planning to sell its milk for a profit. This goes according to plan, but in a year, despite their best efforts consulting the best vets, the cow dies from mad cow disease. Your friend is left with less than they started with.
Meanwhile, you went in with a group of people to buy multiple cows. You paid a farmer to take care of the cows, and some cows produced milk, and some were beef cows. You sold some cows when the price was high and made a profit.
During the year of mad cow disease, some of your cows also died. However, you bought more cows when prices were low, and then you sold somewhen the prices went back up.
Does this sound familiar? It’s a lot like investing!
Let’s break down this analogy illustrated by Aviso Wealth and Cambrian’s financial advisor, Crystal Brown:
Cattle aside, “higher risk investments have potential for higher returns, but they come with greater possibility of losses. Diversifying among several assets is essential,” says Crystal.
You should also consider how much risk is needed to reach your goals. Sometimes it takes more, and other times less.
“Why take on the added risk of extra losses if you can still reach your goals with just a little risk?” says Crystal. “Sometimes you don’t need to go with the higher risk option to get the reward you need.”
TLDR?
“Follow the long-term strategy and stay diversified. View dips in the market as an opportunity.”
If you have questions about your investment strategy or just need help getting started, we can help. Book a meeting with an advisor today.
Mutual funds and other securities are offered through Aviso Wealth, a division of Aviso Financial Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual funds, other securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated.
The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.
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