There is no “one-size-fits-all” investment strategy. That’s because you invest to achieve what’s most important to you. That’s why your local financial advisor will take the time to understand exactly what you’re trying to accomplish, and then work with you to develop a personalized financial strategy. Before we recommend investments, we ask the right questions to better understand your goals, life stage and risk tolerance.
The steps below can help you identify a Portfolio Objective that you and your financial advisor can use as a starting point to help build a portfolio that’s just the right fit for you.
1. Consider your life stage
It’s important to understand how your life stage impacts your financial situation. For example, if you’re younger and retirement is a long way off, your investments will probably look different than if you’re planning to retire in five years.
We’ve identified five investing stages of life: three “accumulation” phases for investors saving for retirement and two “distribution” phases for those in retirement.
The Accumulation Stages. Because most investors will spend more than 20 years in retirement, these stages are a critical first step in working toward building wealth and generally defined as the following:
- Early Investing Years– When you begin your first full-time job.
- Good Earnings Years- When you have 10 to 20 years until you retire.
- Higher Income and Savings Years- When you have up to 10 years until retirement.
The Distribution Stages. Because your retirement can last about as long as your accumulation years, consider how wealth is distributed during the following two stages in retirement:
- Early Retirement Years- When you still have 15 years or more to rely on your investments for retirement income.
- Late Retirement Years- When you have fewer than 15 years to rely on your investments for retirement income.
2. Weigh your risk tolerance
Your risk tolerance, or how much risk you’re comfortable taking, makes a big difference when choosing appropriate investments. Different types of investments carry different levels of risk—but also offer different levels of return potential. Find the right balance between the risk you’re willing to accept and the returns you anticipate receiving. Then, you’ll be in a better position to stick with your investment strategy regardless of what the market is doing. Your financial advisor will walk you through a series of questions so you both can gain a better understanding of your risk tolerance before implementing any strategies.
3. Identify a portfolio objective
A Portfolio Objective helps you and your financial advisor determine the mix of investments that’s right for you. Any one of five Portfolio Objectives could be appropriate for your long-term goals and unique financial situation. Use the Portfolio Objective Guidance Table below as a guide. First, find your life stage across the top. Then, estimate your risk tolerance using the descriptions on the right side.
The portfolio objectives that closely map to both your life stage and your risk tolerance may make sense for your situation, especially if your primary goal is retirement income. But remember, this is just a starting point for your meeting with your financial advisor. Together, you’ll discuss your goals, comfort level with risk and your entire financial situation to help build a portfolio that makes sense for your situation.
Portfolio Objective Summaries
- Income Focus (pdf)
- Balanced toward Income (pdf)
- Balanced Growth & Income (pdf)
- Balanced toward Growth (pdf)
- Growth Focus (pdf)
- All-Equity Focus (pdf)
How we can help
Your financial advisor will help you build a customized investment portfolio and help you understand how each component fits into your retirement and other financial goals.
As the market shifts over time, your investments may not always be aligned with your original investment mix. And your financial goals or current situation may change. That’s why your financial advisor will work with you to regularly review your portfolio and make any necessary changes.
Talk to your local financial advisor today to begin building a strategy that’s the “right fit” for you.