Give Your Portfolio a Check Up

financial advising, personal budgeting, Carson Wealth, Gertsema Wealth Advisors, Saint Joseph, Missouri

by Mike Gertsema

Have you ever had a stress test?

I had one in January of this year. When I got wired and put on the treadmill, I asked the cheerful nurse how long I’d be running, and she told me 9 minutes or until we get your heart rate up to 160 beats a minute. The test started out pretty slow & easy, increasing the speed every couple of minutes so I thought it was no big deal. Well, once we got to nine minutes and my heart rate wasn’t high enough, the nurse increased the speed and raised the incline of the treadmill. Then I was wondering if I was going to have a heart attack and die right there!

Has your portfolio ever had a stress test?

When the markets move in a slow and easy fashion, we all enjoy investing and think this is no big deal. But it all changes when the market starts jumping around in major moves increasing stress and anxiety, not to mention your heart rate.

The questions come one after another. Does my portfolio move higher as the market moves higher? Does it go lower? What does it mean if my portfolio doesn’t do much of anything? What will I do if I lose big on the investments I’ve made – my retirement, my children’s inheritance, my legacy?

The question is one of personal financial health. Is there a way of enjoying the benefits of participating in the stock market when it’s going up and still have some type of protection on the downside?

A Stress Test for Your Portfolio At Gertsema Wealth Advisors we offer a complimentary stress test for your portfolio. We provide you with possible scenarios of how your portfolio participates in an upmarket and a market drop. The scenario represents a major macro-economic or geopolitical event which has the potential to impact investment returns.

The stress test compares the portfolio’s potential downside risk against the 5-year expected return of the portfolio. The downside risk is the maximum downside calculated across all of the scenarios included in the report.

The 5-year expected return first calculates the expected return for the portfolio by calculating the one-year weighted average expected return across all included scenarios. The one-year expected return is then compounded to obtain a 5-year return estimate. Historically, major downside events occur roughly twice a decade, making five years an appropriate timeframe for comparison of long-term returns and downside scenario risk.

This helps us get an overall picture of your personal financial health so we can strategize with you the best program for the future. Just like a doctor can’t work without a diagnosis, so we can’t work until we look at your current financial plan, and most of all listen to you so we know where to begin.

Get a Checkup!

The older we get, the more important it is to take care of our health and get checkups like stress tests done regularly. Today with the advancement of medicine and technology, doctors are able to catch and diagnose health issues well in advance helping people live longer, healthier lives.

In the same way, your personal financial health is vitally important. Take advantage of the advancements in investing strategies and technology that can help you and your advisor diagnose issues before they become problems. Today is the time to be intentional about your health – physically and financially.

Check Up with Your Advisor today!

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