United Bank & Trust Blog

Gary Haapala

As a child I loved roller coaster rides. The anticipation would begin on the way to the amusement park. We were impatiently waiting in the back seat of the car because the line to pay for parking always seemed like it was miles long. My brothers and I would try not to run through the parking lot at the same time trying to getting our parents to move faster so we could get to the gate and be free. Then, we would break into a full sprint to the roller coaster line. The anticipation was almost as much fun as the ride. Not really. We knew what was coming; speed, thrills, and maybe some danger (there were always stories about a roller coaster flying off the tracks). And 90 seconds later, it was over. Then we would move as fast as we could to get back in line to do it again. We could not get enough.

As an adult – not so much – I can barely stand the sight of watching my children ride the roller coaster from the safety of a bench under a tree with my feet firmly on the ground. I now enjoy a whole new experience at the park (yes, I removed amusement). Now, it is all about being with – and enjoying – my family. Things like; being entertained by shows, fellowshipping over a meal, playing games to win a teddy bear, and a refreshing tube ride in the water park’s meandering river. This is a much more predictable outcome resulting in a completely enjoyable and lasting experience.

Does the volatility in the stock market and your investment portfolio feel like a roller coaster ride? On March 9, 2009 the Dow Jones Industrial Average closed at 6,547 from a frightening ride down during 2008. As of April 21, 2010, it closed at 11,125 a 70% increase, or exhilarating ride up since then. It doesn’t have to feel like a roller coaster ride; you might have once enjoyed the ride by being an aggressive growth investor but maybe it is time to enjoy the experience by getting a deeper understanding for your tolerance for risk.

One way to achieve this is by building a moderate growth investment portfolio. This could be a portfolio that invests in stock and bond mutual funds that are diversified across multiple asset classes and investment styles. By utilizing mutual funds you have the ability to further diversify your risk. Investment outcomes are not predictable, but understanding your risk tolerance and using diversification as a tool will make the ride an enjoyable experience. If you would like help, contact us and one of our financial advisors will strive to help you achieve your goals.