Adrian Mastracci, portfolio manager at KCM Wealth Management, says “Make sure your investing is tax friendly. One major change is a reduced tax on eligible dividends."

Vancouver, BC (March 05, 2007): Understanding and containing investment risks is always in style. The February 27th drops of 416 points on the Dow and 364 on the TSX are vivid reminders.

James Bryant Conan, past president of Harvard University, once said: "Behold the turtle. He makes progress only when he sticks his neck out."

Adrian Mastracci, portfolio manager at Vancouver based KCM Wealth Management, says, “Investors see risk as a four-letter word. Don’t dread it. Stick the neck out, but manage it. It's job one.”

Wise investors care about risk. Others shop for returns. Portfolio battles are won or lost at this basic level. Yes, managing risks is more important than selecting the investments.

Many portfolios are muddled. Stuffed with 20 or more different fund names. Often with 50% or more similarity of securities, in an equity mix up to 95%. No wonder they're soaked in risk.

Risks are not always well understood. Right now, the markets are full of emotions and fears. Those who master the risk game achieve better investment success.

Take a deep breath for a little perspective. Here is some history on major drops of the Dow:

Portfolios incur many types of risks. But, it’s risk that ultimately delivers investment returns.

Focus your attention on three major factors for tolerating risks:

• Ability to incur investment risks is associated with the investment time horizon.
• Willingness to incur the risks is associated with the investor profile.
• Need to incur risks is associated with the required rate of return.

These strategies help keep the dreaded investment risks in check:

1. Risks first, returns later

There is a right way and a wrong way to invest. Prudent investors consider risks first, returns later. The goal for each investor is to be comfortable, as well as to seek a good return.

Ask where you want your portfolio to be in 5 to 10 years. Not in 2 to 12 months. If you focus on the short term, you’ll encounter unpredictable events that can affect portfolio outcomes.

Returns will eventually reward investors who focus on investment risks. Risks will eventually catch up to investors who focus on returns.

2. Spread your wealth

I don’t know where the markets are headed from here. I accept that some investments will disappoint. My serious money portfolios are broadly diversified among geographies, sectors and asset classes.

All within an asset mix comfortable to each investor. Quality is key in investment selection. No single stock should spoil the day if it stumbles over the cliff.

Portfolios ought to contain a variety of asset classes that don't all move in the same direction. Broad diversification saves the day most times. Look upon diversification as prudent safeguard.

3. Know when to fold

Kenny Rogers said it best, “You’ve got to know when to hold, when to fold and when to walk away.” Apply this insight to your investing. Try your best not to take a large loss. Little ones are far better.

Part of investing is about coming to grips with the prospects of being wrong. What hurts portfolios the most is not incurring losses. Rather, it is keeping them far too long.

Be totally dispassionate about your investments, especially losses. Take the awful medicine early and swiftly. Stop the bleeding and move on. No second guessing.

4. Take your time

Remove the pressure of when to buy. There is no need to be fully invested all at once.

Investors can take ample time to get their mix in order. Say over one or two years. Perhaps, buying systematically: like monthly, bimonthly or quarterly.

This works both in bull and bear markets. A few entry points into the markets average out the bumps and grinds.

5. Leverage can bite

Borrowing to invest can be both very exciting and very painful. However, savvy investors keep borrowings in check.

Returns magnify when levered investments deliver. Returns vanish when they go sour. Often producing large losses. And loans still have to be repaid when things don’t turn out.

Be careful when the investment manager borrows and invests on your behalf. You lose control over the process. A better way is to retain borrowing control in your hands. You'll sleep better.

6. Design your roadmap

The best approach is to invest with your logical side of the brain. Not the emotional.

Seek the assistance of an unbiased investment advisor. There is value in designing a realistic game plan, dealing with portfolio risks and structuring a sensible asset mix.

These advisors also know the values of monitoring and rebalancing portfolios. Rebalancing involves periodic tweaks to bring portfolios back into line with the original targets. The ones that made sense.

Ask yourself what the future is to look like for you. Then concentrate on strategies to manage your investment risks.

It's definitely your job one.

I welcome your questions, comments and opinions.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.