Building Your Ideal Retirement Portfolio
The ideal retirement portfolio will differ from person to person. What is an ideal retirement portfolio? It is a portfolio that will allow you to retire comfortably. While each portfolio will differ, generally it should contain certain core characteristics. In this article, we will go over those characteristics and what they can do for you and your retirement plan.
It is important that you set defined goals. This may be the amount you want to retire with or it could be when you want to retire. You need to determine what you need so that you can save proportionately and allocate your investments properly. If your goals change, make sure that you make the appropriate changes in your portfolio.
Your retirement portfolio needs to be able to grow and sustain itself over a long period of time. Having the main objective of capital preservation or income does not mean that you should not try to sustain some type of growth in your account. At a minimum, you should try and keep up with the rate of inflation. It is important to keep your balance growing, no matter how slight that growth is.
Diversity in Asset Allocation
Your asset allocation should be diversified appropriately according to the life stage you are in and your personal situation. For example, your allocation will change between pre-retirement and post-retirement. For example, the younger you are the more aggressive you can be. The more you age, the more conservative your portfolio should start becoming. You also need to make sure you are not too heavily invested in one thing. Doing so could have a drastically negative effect on your retirement plan.
The level of safety that you should have in your portfolio will depend on your life stage. The closer you get to retirement, the more you should focus on safety than growth. The older you get; the more important asset preservation becomes. However, limiting your investments in only guaranteed instruments is not necessary until late into your retirement.
Successful Retirement – It Is Possible
Everyone wants to be able to retire comfortably. By balancing growth, income, and capital preservation and factoring in your risk tolerance, investment objectives and time horizon you can be successful. Your path to creating your ideal retirement portfolio does not have to be lonely. You can enlist the help of a Certified Financial Planner®. They can implement the appropriate strategies to help you reach your retirement goals.
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