A Message from Our Chief Investment Officer
We want to make clear that Alerus Financial, N.A. is in strong financial condition. However, the safety of your account is not tied to Alerus’ financial viability. We are required to hold client assets as either a trustee or custodian and must keep these assets segregated from the general assets of the bank and holding company.
Alerus Financial's investment philosophy and process has not changed and it is important for you to know why. Over the short run, the market can shift its attention and tend to favor one investment management style or asset class over another. However, these shifts can only be seen in retrospect. Attempting to correctly predict and time style shifts is virtually impossible. Many investment managers have tried, failed miserably and gone out of business as a result due to disastrous performance. Maintaining a proven, consistent style has proved to be the most successful approach to investment management over the long run. Alerus Financial has maintained its philosophy and investment process for several decades.back to top
It is only natural to be inclined to sell stocks now and move back into them when you feel more comfortable; and getting out of stocks and moving to cash should eliminate much of the volatility from your portfolio. However, the problem with that strategy is you probably won't feel comfortable about getting ‘back in’ until after stock prices have improved considerably thereby costing you more money. History has proven time and again that very few investors are nimble enough to ‘get back in’ at the right time. Predicting exactly when the stock market may spike or fall is virtually impossible.
So, if your intent is to sell now and get back into the market later, it may be better to hold tight and stay invested. We believe the market will eventually rebound. This may be a lengthy process, but if time is on your side, holding tight will likely be a more profitable strategy for you.back to top
We would be happy to visit with you about your allocation. Feel free to schedule a phone or in-person appointment. Our approach is to review your entire portfolio, not just one component of it. We design your asset allocation to fit your personal situation including your cash flow needs, age, risk tolerance, etc. This may also be an excellent time to make sure your investments are appropriately allocated.back to top
You have several options. You could make a sudden and severe change in your current allocation, although that might not be advisable when stock prices are so low. Or, you could leave your current portfolio unchanged while making more conservative investments systematically in the future. A third option would be to wait until stock prices have recovered, then make an allocation shift at that time. The third strategy may take a fair degree of patience and courage, since we cannot predict with certainty when prices will improve, but may prove to be more prudent. We do recommend selecting a strategy and sticking to it throughout the ups and downs in the markets.back to top
That's a question we can help you answer through financial planning. Be prepared to discuss your entire portfolio, its size, its allocation, the level of income you'll require when retired, etc. As your financial advisor, we can help you plan retirement cash flows and review other important retirement items like insurance needs or estate planning. Having a clear picture of the upcoming years can give you a secure and happy retirement.back to top
Remember that when the market is at a high, you must actually sell your stocks in order to realize the gain. Similarly, when the market is down, you won’t realize a loss unless you sell. That said, your concern is understandable because this downturn in the market has been especially severe. It is important to remember that in the past, even after severe downturns, the stock market eventually recovered.
Times like these require discipline and some degree of courage, but pulling out of the market now will only serve to lock in these current depressed values. If you have the time and patience, your stock investments will likely recover their value over time. back to top
Alerus cannot arbitrarily move in and out of stocks within a client’s account. We are obligated to manage each account according to the target allocation established by the client in their Investment Policy Statement. Portfolio reviews are conducted at least annually. During those reviews, asset allocation targets are discussed and either reaffirmed or altered. The best thing to do is to stay in touch with your Alerus advisor to discuss whether or not your allocation is appropriate given your objectives and risk tolerance.back to top
In general, it's a true statement that bonds are safer than stocks. But bond prices can go up and down in value, too. Historically, bond prices are mainly affected by two things: 1) shifts in interest rates, and 2) credit quality. The good thing about a bond is that if the issuer is financially stable, the bond will continue to make its interest payments and return to stated value at maturity. Over the past year, however, even some high quality bond prices have been very volatile.back to top
Probably, but you should temper your expectations. While it can be argued that it is a good time to buy while market prices are so low, the potential still exists for further losses before the market turns higher.back to top
No, your trust IRA account is not insured, but specific securities in the account may be insured. Please visit with your Alerus advisor for further information.back to top
The investment portfolios managed by Alerus Financial are well diversified across many areas of the market. It is safe to say that when the market recovers, your portfolio will recover as well.back to top
Your investment allocation, strategy, and plan are unique to your personal financial situation. With a thorough understanding of your financial situation, lifestyle, and goals, your Alerus professional can advise you to create or review your customized strategy specifically to meet you and your families needs.back to top
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