By Dom DiFurio  Domenico Fornas // Shutterstock 

In this episode of “Investment Management Foundations,” Wealth Enhancement Senior Portfolio Manager Ayako Yoshioka takes a look at persistent inflation and explains how it’s changed year over year.

For decades, investors have been told that investing in a portfolio of 60% stocks and 40% bonds is a tried-and-true method to diversify and optimize returns. This strategy assumes that most of the returns will come from your equity exposure while fixed income will provide the needed ballast to offset losses in down years for the market. Modern portfolio theory supports this methodology, and since 1945, it has yielded an average return of close to 10%.

Affluent investors hungry for financial advice have their pick of wealth managers to help them. It’s a crowded field, and because of that, it stands to reason that not all are created equal.

Fear is one of the most primal feelings in the human experience. When harnessed correctly, internal fear can be an incredibly powerful motivator. However, if fear is not harnessed correctly, or if the fear is too powerful, we can become paralyzed. Paralysis by fear inhibits our mental processes and can often lead to irrational thinking. This is especially problematic when fear creeps into investment decision making.

Smart financial planning is a crucial element when preparing for retirement, but that’s just one half of the equation. Effective portfolio management is an equally critical component.