Investment Planning
Am I taking the right level of risk with my investments given my goals, time horizon, and risk tolerance? Dedicating the time to discuss these important factors with a professional can help you develop an investment plan that strikes the right balance—one where the level of risk doesn’t cause undue stress, while still allowing you to achieve your long-term goals.
Risk Tolerance
Your risk tolerance is the level of volatility you are willing to accept within your investment portfolio. Understanding and investing within your risk tolerance helps you remain comfortable, even during periods of uncertainty.
Generally, individuals with lower risk tolerances are willing to accept lower expected returns over the long term in exchange for greater safety. A more stable portfolio offers a higher level of predictability regarding outcomes.
On the other hand, investors with a higher risk tolerance are more willing to accept potentially severe downturns in pursuit of higher long-term returns. Taking on this level of risk is typically aligned with having a longer time horizon, where short-term volatility does not sacrifice long-term goals.
Portfolio Asset Allocation
The asset allocation of your portfolio is the mix of different investment options you hold. Typically, stock investments are considered riskier, while bond investments are intended to provide greater stability.
The balance between stocks and bonds in your portfolio should align with your specific risk tolerance. It’s important to note that both your risk tolerance and asset allocation may change over time. For instance, as you approach retirement, you may no longer feel comfortable with the volatility of the stock market and choose to rebalance your portfolio by allocating a greater portion to bonds for added stability.
Additionally, you can be tax efficient with your asset allocation by ensuring that faster-growing investments are allocated in your Roth and after-tax accounts. We’ll assist you in making sure your portfolio is constructed for both growth and tax efficiency.
Personalized Investment Management with Fiduciary Responsibility
Unsure if your portfolio’s investments match your risk tolerance and are in line with your goals? Schedule a consultation with one of our advisors today.