Walking through the financial maze of stocks, bonds, Exchange Traded Funds (ETS), and mutual funds can be quite a challenge. We offer the following tips to give you the know-how on building a profitable portfolio.
* Know your goals. Consider how much money you’ll need for your children’s education or your retirement. Whatever your vision for the future might be, set your goals and develop a concrete plan for meeting them. Invest with the idea and notion of achieving that goal or goals you have set for yourself and your family.
* Define your investment time horizon. If you’re not planning on retiring anytime soon, you might want to have a portfolio that includes more long-term investments. If retirement is just around the corner, consider a more conservative approach. We recommend that even in retirement, you may want to avoid the traditional 60% stock and 40% bonds. Warren Buffett has suggested a 90% investment in low-cost index funds and 10% in short-term Treasuries. This was suggested due to longer lifespans and the need for your capital to appreciate due to a longer retirement. But a study by Spanish Professor Javier Estrada suggested the 60/40 split had about a zero chance of failure, see results.
* Determine your risk tolerance. Figure out your risk comfort level and compare that with what you can afford. In general, the longer you have to invest, the bigger risk you can take. I am a strong proponent of being heavy on equities and lighter on bonds. Over decades, equities have been quite safe as the market is always on an upward trajectory with corrections and dips along the way. Bear markets, on average last approximately 290 days or roughly ten months. See markets for more details on Bear markets.
* Consult a professional. To avoid financial pitfalls, it is often wise to seek professional guidance when putting together a portfolio later on. As Registered Financial Consultants (RFC), we can assist you in your financial advising needs.
“Recent research shows that investors continue to grapple with some of the most basic investment concepts, suggesting a greater need for financial advice and guidance,” said Doug Lockwood, a Certified Financial Planner.
To help investors meet their financial goals, KG Meyer, PC has developed a program designed to help investors build and maintain diversified investment portfolios – at no additional cost.
Combining educational tools, advice, market insight, and investment products, KG Meyer, PC helps investors develop a personal investment strategy, whether they are new to investing, seeking guidance but still want control over their investment mix, need help positioning their portfolios with a long-term perspective or need help understanding how the markets work.
For more information on how to invest and the markets, get a copy of How the Stock Market Operates today. And for more information on the methods used at KG Meyer, PC, feel free to contact us today if you are in or around the Metro Nashville area. For those outside Tennessee, you are still free to contact us or seek out a qualified fee-only Registered Financial Consultant today.
