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Walking the tightrope of risk, reward

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[...] though, there's plenty of reason for investors to be concerned. [...] when [real estate -related] companies try to refinance their short-term loans, they find it tough to find a lender, putting further pressure on them.

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                                                                                                                                                                  Walking the
Christina Mazza




                                                                                                                                                                  tightrope of
                                                                                                                                                                  risk, reward
                                                                                                                                                                  Advisers: Diversified portfolios can protect assets
                                                                                                                                                                                            By Martin C. Daks
                                                                                                                                                                  When small-business owners and other individuals review their
                                                                                                                                                                  retirement or other investment portfolios, it’s easy to get discouraged.
                                                                                                                                                                  but investors who stay agile and maintain a diversified portfolio that
                                                                                                                                                                  carries some nontraditional holdings may be better able to balance
                                                                                                                                                                  their risks and returns, some experts say.
                                                                                                                                                                        First, though, there’s plenty of reason for investors to be
                                                                                                                                                                  concerned. anyone who had heavy exposure to stocks probably
                                                                                                                                                                  found their holdings hammered in the past year or so, as retail
                                                                                                                                                                  activity slowed, near-cash instruments offered scrawny returns and
                                                                                                                                                                  real estate investments teetered, with a weak, uncertain economy
                                                                                                                                                                  looming over nearly every
                                                                                                                                                                  investment decision.
                                                                                                                                                                        so it’s understandable
                                                                                                                                                                                                  Focus on future, not
                                                                                                                                                                  why some people freeze          current, conditions
                                                                                                                                                                  and do nothing, said Mark
                                                                                                                                                                  Cortazzo, senior partner of PeoPle who are not yet
                                                                                                                                                                  Macro Consulting Group, retired shouldn’t worry too
                                                                                                                                                                  a financial advisory firm much about the bear market,
                                                                                                                                                                  in Parsippany.                    according to Jerry A. Miccolis,
                                                                                                                                                                        “One new Jersey cli- a senior financial adviser at
                                                                                                                                                                  ent had $1.5 million earn- Brinton Eaton Wealth Advi-
                                                                                                                                                                  ing seven-hundredths of 1 sors, in Madison.
                                                                                                                                                                  percent annually in a tax-             “If you’re in your 40s or
                                                                                                                                                                  free money market,” Cor- early 50s, you’ve got decades
                                                                                                                                                                  tazzo said. “he was earn- left on the investment horizon,”
                                                                                                                                                                  ing about $1,000 a year, he said. “So don’t be too worried
                                                                                                                                                                  which is too low of a return if interest rates are low today,
                                                                                                                                                                  on that kind of capital. or if we’re in the late stages of a
                                                                                                                                                                  We were able to suggest recession. The biggest challenge
                                                                                                                                                                  a money-market account, is inflation, not the short-term
                                                                                                                                                                  insured by the FDiC, that economic cycle. If you’re too
                                                                                                                                                                  yields 1.75 percent,” he conservative now, you run a
                                                                                                                                                                  said, referring to protec- greater risk of losing purchasing
                                                                                                                                                                  tion through the Federal power in the future.”
                                                                                                                                                                  Deposit insurance Corp.                               — Martin C. Daks
                                                                                                                                                                        One of the investment
                                                                                                                                                                  products Cortazzo offers is made up of about one-third bonds, one-
                                                                                                                                                                  third equities and one-third alternative investments, like commodi-
                                                                                                                                                                  ties and currencies.
                                                                                                  
								
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