Time to Review Your Investment Strategy for the Year
As the year draws to a close, it’s a good time to review your progress toward your financial goals. But on what areas should you focus your attention?
Of course, you may immediately think about whether your investments have done well. When evaluating the performance of their investments for a given year, many people mistakenly think their portfolios should have done just as well as a common market index, such as the Standard & Poor’s 500. But the S&P 500 is essentially a measure of large-company, domestic stocks, and your portfolio probably doesn’t look like that – nor should it, because it’s important to own an investment mix that aligns with your goals, risk tolerance and return objectives. It’s this return objective that you should evaluate over time – not the return of an arbitrary benchmark that isn’t personalized to your goals and risk tolerance.
Your return objective will likely evolve. If you are starting out in your career, you may need your portfolio to be oriented primarily toward growth, which means it may need to be more heavily weighted toward stocks. But if you are retiring in a few years, you may need a more balanced allocation between stocks and bonds, which can address your needs for growth and income.
So, assuming you have created a long-term investment strategy that has a target rate of return for each year, you can review your progress accordingly. If you matched or exceeded…
(To continue reading this article, please contact us today for a print or email subscription to the Jefferson Jimplecute! — (903) 665-2462, JIMPLECUTE1848@GMAIL.COM)