Retirement investment portfolio’s should be balanced to mitigate any excessive risk. Capital preservation and steady growth over the long term are essential. The baility to forecast over a long period of time with a balanced portfolio can be pretty accurate and one should always take the conservative growth outlook as the one to make any decisons by.
This is not to say that you cannot make riskier investments, it is saying that your portfolio should include a good balance of low risk investments as well as slightly higher risk investments as part of the mix. The amount invested in riskier investments should change as you get closer to retirement.
Below is a diagram showing balanced portfolio allocations dependent on the appetite for risk. Your stage in life and the amount of excess cash you have available to invest will determine which balanced portfolio to set up.
Portfolio performance, asset manager performance or stock performance cannot be guaranteed and past performance is no guarantee of future performance. These are common words use by all wealth managers and for good reason. If we knew what returns we were going to get we would not need a stock market.
Each individual has different needs and expectations and hence each individual balanced portfolio should be structured slightly differently.
The first thing that any investor should do is get rid of short terms high interest debt. The returns you get on settling short term debt like credit cards, store cards and the likes is the interest you are being charged. Short terms debtr is usually at much higher interest rates than any investment portfolio is likely to return.
Successful investing is not guaranteed. However, there are some basic considerations which are dependent on age and risk, for which investors can rely on. Portfolio allocation are structured using stocks, bonds and cash that align with your risk tolerances and short term versus long term needs is important to begin with.
Once you have determined your risk profile, you can potentially broaden your investments to alternative higher risk investments like property or take calculated high-risk investments in potentially high growth stocks to reach for those nice to have returns. Overall, the most balanced portfolio for you, will be one that is in line with your risk tolerance, goals and needs in the future.
If you would like a completely free assessment of your risk profile and advice on the best balanced investment portfolio for your needs, contact us and a qualified advisor will help you construct a balanced portfolio.