How to Think About Investment Risk

Professional investors often focus most of their performance conversations on relative risk, or how a portfolio compares to a benchmark. But for long-term investors, absolute risk often matters more. Absolute risk is the risk of permanent loss, missing goals, or falling short when it counts. When working toward a long-term plan, we believe the more you try not to look wrong in the short term, the more likely you are to be wrong in the long run. Better outcomes often require embracing short-term discomfort in pursuit of long-term gains. While relative risk helps shape portfolios, absolute risk is often a better measure of success. In the end, it’s not about avoiding volatility. It’s about achieving your personal goals—even if that means looking different from others.

If interested in a deeper dive on the question of absolute risk versus relative risk, we encourage you read our article, “Monthly Investment Commentary: June 2025”.

The information provided is educational and general in nature and is not intended to be, nor should it be construed as, specific investment, tax, or legal advice. Individuals should seek advice from their wealth advisor or other advisors before undertaking actions in response to the matters discussed. No client or prospective should assume the above information serves as the receipt of, or substitute for, personalized individual advice.

This reflects the opinions of Focus Partners or its representatives, may contain forward-looking statements, and presents information that may change. Nothing contained in this communication may be relied upon as a guarantee, promise, assurance, or representation as to the future. Past performance does not guarantee future results. Market conditions can vary widely over time, and certain market and economic events having a positive impact on performance may not repeat themselves. Investing involves risk, including, but not limited to, loss of principal. Focus Partners' opinions may change over time due to market conditions and other factors. Numerous representatives of Focus Partners may provide investment philosophies, strategies, or market opinions that vary. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives.

© 2025 Focus Partners Wealth. All rights reserved. RO-25-4611776