Visiting with friends the other day, the conversation turned to how difficult it is to make money in this market – that particular comment started me thinking again about this gap that sometimes occurs between how we think about our accounts vs. having an overall investment strategy for your portfolio. And also that the idea that we can’t predict the future is hard to accept.
I’ve talked to a few people over the past few months that will tell me about some of the defensive moves they have made in one of their accounts. I know this is a good feeling for them – at least for now. The not-so-great feeling comes when we project out their expenses with the impact of inflation, and their portfolio struggles to keep up.
To me, it highlights the importance of looking at ALL your investments accounts and labeling the purpose and timeframe of the account. If your investments accounts are for your retirement, then this is your retirement portfolio. And your retirement portfolio should have an asset allocation that makes sense for not only when you retire, but also for the time span of your retirement.
And once you have the proper asset allocation for your portfolio, it’s a matter of finding the appropriate investments to make up that allocation. So, despite whatever is going on in this market, your plan stays intact. For most time periods, we expect some assets will be up, some will be down. Overall, your retirement portfolio should be less volatile and experience growth in the long term – making money for your retirement as opposed to making money in this market!
This data is for informational purposes only; please consult with your advisor or tax professional for your individual situation. Diversification and asset allocation does not ensure a positive return or protect against a loss.