Know what you own and why

In the realm of personal finance, understanding your investments is vital. For example, just because your late husband had specific preferences for his portfolio doesn’t necessarily mean you should follow suit. Here’s why:

Understanding your goals and risk tolerance

Everyone has unique financial goals, and the path to achieve those can significantly differ from person to person. Similarly, risk tolerance—how much financial risk you’re comfortable with—varies significantly between individuals. Your husband’s investments might have aligned with his risk profile and financial objectives at the time, but they might not necessarily suit yours now.

Adapting to changing market conditions

The performance of an investment portfolio is influenced by many factors including economic trends, geopolitical scenarios, and industry-specific developments. Investments that performed well during your husband’s lifetime might not be as profitable now due to changing market conditions. Regular portfolio reviews and adjustments are essential to navigate such shifts.

Is it too risky?

It’s possible that the portfolio you inherited may lack diversification, particularly if your husband had a high tolerance for risk or a specific investment preference. Overexposure to a particular asset class, sector, or geographic region can heighten the portfolio’s risk. I’ve seen widows whose accounts consisted 100% of a couple of stocks that their husbands — who had died decades earlier — had loved. Reviewing these investments with a financial advisor can help ensure your portfolio is well-diversified and aligns with your risk tolerance and financial goals.

Your husband might have had a strong understanding of certain complex financial instruments or sectors. If you don’t share that knowledge, holding onto these investments could be risky. It’s crucial to comprehend each investment in your portfolio, so you can make informed decisions about buying, holding, or selling.

The emotional aspect

Holding onto your husband’s investments might feel like a way to maintain a connection with him. But remember, financial decisions should be based on rational considerations rather than emotional factors. Maintaining underperforming investments for sentimental reasons could hurt your financial health in the long run. After all, being financially secure is likely what your spouse would have wanted.

Inheriting a portfolio can be a stepping stone to financial security, but blindly holding onto inherited investments may lead to financial instability. By knowing what you own and why, you’ll be better equipped to plan for your future.

How to get more info

Call my office (02-624-2788) if you need more information on what you own in your inherited portfolio.

Douglas Goldstein, CFP®, GFP®, is the director of Profile Investment Services, Ltd. He is a licensed financial professional both in the U.S. and Israel. Call (02) 624-2788 for a consultation on how to set up your American assets to meet your financial goals. Securities offered through Portfolio Resources Group, Inc. Member FINRA, SIPC, MSRB, FSI. The opinions expressed are those of the author and not those of Portfolio Resources Group, Inc. or its affiliates. Neither PRG nor its affiliates give tax or legal advice.

Published September 19, 2023.

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