Is Your Retirement at Risk?
Is your investment portfolio aligned with your current age?
Is your investment portfolio aligned with your future financial requirements?
Is your investment portfolio aligned with your life expectancy?
In other words, are you prepared for retirement?
Each of these questions falls in line with what is known as your time-horizon.
- Your time-horizon will determine how aggressive or conservative you should be invested in the markets.
- Your time-horizon will determine how long you should expect to own your investments after you buy them.
- Your time-horizon will determine how to construct your estate plan in the event of an untimely death.
- Your time-horizon will determine how much longer you plan on working for an income.
The idea is that one who is nearing retirement should have minimal exposure to the markets from the risk of losing a substantial amount of your investment in a short time period. The focus of your investment strategy at this point of your life will ideally be geared towards wealth preservation rather than growth.
On the other hand, if you are 30 years old for example, and intend to keep your portfolio invested until you're 65 years old, you have a substantially long time-horizon of 35 years. At this early stage, you can bear more risk of exposure with your investments by having the extended time to ride out the ups and downs of the markets.
However, there is no one size fits all for any specific age group. It really depends on your unique circumstance and the end goal.
For example, you may have an investment portfolio allocated to fund the college tuition for your 14-year-old child. In this case, the investment portfolio most likely should be constructed more conservatively; similar to an investment strategy for one who is nearing retirement. [Conservative as in lower-risk investments].
We are currently in the midst of the longest bull market run in American history since the S&P 500 index dropped to a low of 666 in 2009. In recorded history, a long bull run is always followed by a market correction. In other words, what goes up must come down. GREED will destroy your investment portfolio if it is not constructed in accordance with your time-horizon.
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Disclaimer: Hudson Wealth Management, LLC (HWM) is a FINRA registered investment adviser firm. Investing in securities involves risks, and there is always the potential of losing money when you invest in securities. Before investing, consider your investment objectives and HWM's fee schedule. The information provided herein is for illustrative purposes only and does not constitute personalized investment advice, recommendations or solicitations to hold, buy or sell any investment or security of any kind. All images and return figures shown are for illustrative purposes only and are not actual customer or model returns. Past performance does not guarantee future results.
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Eric K. Hudson specializes in the following...
- Financial Advisor
- Comprehensive Financial Planning
- Wealth Manager
- Retirement Planning
- Estate Planning
- Investment Portfolio Manager