Your Investment Portfolio Is Probably Riskier Than You Think

Group 1 - Investors should be cautious of complacency as they age, particularly around age 50, as their capacity to absorb risk diminishes despite feeling more risk-tolerant [1] - The last significant economic downturn occurred 17 years ago, suggesting the need for investors to mentally prepare and reposition their portfolios towards safer assets [2] - Recency bias can lead investors to mistakenly believe that current market trends will continue, which can result in crowding into hot sectors like AI and Big Tech without considering potential downturns [3] Group 2 - Investors are advised to adopt a "set-it-and-forget-it" mentality, as frequent portfolio adjustments can lead to diminished returns, likened to a bar of soap that gets smaller the more it is handled [4] - A once-annual review of the portfolio is recommended, focusing on performance, rebalancing, and tax-planning strategies, to avoid excessive tinkering that could harm long-term investment outcomes [5]