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How to Check Your Portfolio's Risk Level

How to Check Your Portfolio's Risk Level

For more, see our complete portfolio tuneup special report

Christine Benz: Hi, I'm Christine Benz for

There are scores of backward-looking measures of risk and volatility, such as standard deviation and beta. Those can be helpful, but how do you know how risky your investments, and in turn your portfolio, are likely to be in the future? For that, you need to do some sleuthing. Here are some of the key things to focus on.

Start by using Morningstar's X-Ray tool to get a read on your portfolio's mix of stocks, bonds, and cash. If you haven't checked in a while, you may find that your stock allocation has gotten higher than your target for it. Generally speaking you want to take less risk in your retirement portfolio as the years go by, not more.

The next step in checking up on your portfolio's risk level is to assess your equity holdings. X-Ray shows you your portfolio's sector weightings and style-box positioning. You can also use the Stock Intersection feature to see if you have a lot riding on a single stock.

Also check up on the safer holdings in your portfolio. If you're holding bonds to provide diversification and reduce your portfolio's volatility, you'll want to make sure the bulk of your bond assets are in high-quality, short- and intermediate-term bonds and bond funds.

Don't forget to review your cash holdings, either. You can't lose money in investments like CDs and bank accounts, but you want to make sure you're earning the highest yield you possibly can.

Thanks for watching; I’m Christine Benz for

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About the Author

Christine Benz

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Christine Benz is director of personal finance and retirement planning for Morningstar, Inc. In that role, she focuses on retirement and portfolio planning for individual investors. She also co-hosts a podcast for Morningstar, The Long View, which features in-depth interviews with thought leaders in investing and personal finance.

Benz joined Morningstar in 1993. Before assuming her current role she served as a mutual fund analyst and headed up Morningstar’s team of fund researchers in the U.S. She also served as editor of Morningstar Mutual Funds and Morningstar FundInvestor.

She is a frequent public speaker and is widely quoted in the media, including The New York Times, The Wall Street Journal, Barron’s, CNBC, and PBS. In 2020, Barron’s named her to its inaugural list of the 100 most influential women in finance; she appeared on the 2021 list as well. In 2021, Barron’s named her as one of the 10 most influential women in wealth management.

She holds a bachelor’s degree in political science and Russian language from the University of Illinois at Urbana-Champaign.

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