What is Your Maximum Drawdown?

How can you determine your risk tolerance and set up your investments in a way that will result in success? Today, Brian explains the maximum drawdown and how that relates to your financial plan

Honest Takes:

Some of us may have a short memory when it comes to the last major recession. What can you do to prepare and how can your plan be invested accordingly? What is your risk tolerance?

Brian talks about determining your risk level to start. It’s important to match your portfolio with your risk tolerance. Your advisor needs to be investing in the way that matches your needs and risk tolerance. Determine your maximum drawdown by calculating what amount your portfolio or a stock went down over a certain time period. Make a plan if this were to happen again.

How can you be successful? Brian shares a story about a client who had sold his stocks and put his money in the bank instead. He was afraid to get back into the market. People like to buy when things are going up, but it’s harder to hold on when things are going down. You don’t need to be ultra aggressive if it will make you too scared when things go down. Consider what you can handle in order to stay successful with your investments. Are you working with an advisor to coach you through your financial decisions? That behavior modification can save you and make you a lot of money in the long run. Have a financial plan to stick with your investments and be successful.

Listen to the entire episode or click on the timestamps below to skip ahead.

[0:13] Do you have a short memory when it comes to the recession?

[2:26] What is maximum drawdown?

[6:26] The 2008 recession made a lot of people get out of the market.

[8:25] Financial woes can cause a lot of stress.

Today’s Truth:

“The worst thing you can do is exit and then never go back in.”

Brian Bowen


The Host:

Brian Bowen – Contact