Investment Strategies
Several studies have shown that proper asset allocation is one of the most important factors in determining an investment portfolio's performance.
Some studies indicate that the allocation of assets accounts for as much as 90% of a total portfolio return. This means that as little as 10% of a portfolio's return is dependent upon the individual stocks and bonds actually placed in the portfolio.
As defined by the Security Exchange Commission (SEC), "asset allocation" involves dividing an investment portfolio among various asset categories (such as stocks, bonds and cash) in a way that best aligns with an investor's risk tolerance and investment goals. Asset allocation may sound confusing but it really isn't. The asset allocation mix that works best for you depends on many factors, including your investment time horizon, age, income and how much risk you are willing to tolerate.
Assess Your Risk
Risk tolerance is your ability and willingness to lose some or all of your original investment in exchange for potentially greater returns. Conservative investors generally do not like taking big risks when they invest and will usually forego investments that offer potentially higher returns in favor of investments that will preserve their original investment. Others are aggressive and willing to take larger risks as long as they have a chance for more substantial returns. Of course, many investors fall somewhere in between.
What type of investor are you?
Does your investment portfolio currently reflect your risk tolerance? If unsure, our Financial Advisor James Tait (available through CUSO Financial Services, LP*) may be able to assist you in determining your level of risk tolerance.
Time Horizon
Simply put, your time (or investment) horizon is the proposed length of time for which you'd like to invest your money. In terms of investing for retirement, the longer the period of time until retirement, the more risk (and potentially higher reward) you may be willing to accept. A longer time horizon may allow you to better weather the ups and downs of your investments and take advantage of the overall long-term growth potential they offer. Of course, your time horizon will also impact the way that assets are allocated within your portfolio.
The role of your financial advisor
Assessing your personal risk tolerance and determining the appropriate asset allocation mix to match will have a lasting impact on the type of retirement you enjoy. Because these decisions are so critical, consider working with James Tait of Sb1 Financial Services.
James may be able to assist you in determining the portfolio mix that best suits your needs and goals. To schedule an appointment with James, ask a branch representative today. You can also call him directly at 888.564.4900 or e-mail him at
James.Tait@sb1fcu.org.
For more information about Sb1 Financial Services,
click here.
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*Securities offered through CUSO Financial Services, LP (CFS), an independent broker/dealer, (Member FINRA/SIPC). Financial Advisors are independent representatives registered through CFS. The products offered are not NCUA/NCUSIF or otherwise insured; are not obligations of the credit union; are not guaranteed by the credit union; involve investment risks, including possible risk of principal.
