Balancing Growth and Stability

For Mark Roberts’ Use:

A basic investment principle is that assets which have the potential for greater growth usually carry greater risk. Investors who are two or three decades away from retirement have more time to recover from losses, so they may decide to accept the risk of more aggressive investing. However, those nearer to retirement age generally shift their priorities to conserving principal, and therefore pursue a more conservative asset allocation. This strategy helps to manage risk, though it does not completely guarantee against losses.

Of course, without some growth, your principal can suffer from withdrawals. It’s also important to keep in mind the effect inflation has upon spending power. It’s important to find a balance between growth and stability, so consider the following factors.

You may live much longer than you think. With the average life expectancy increasing, your savings may need to last much longer than you originally expected. This means you also have more time to pursue more growth in your portfolio.

Consider other forms of income. While Social Security is not intended to be a primary source of income during retirement, it can be pieced together with other forms of earning to create a viable monthly income. Rental properties, business income, or an inheritance may help you to gain more flexibility in your investment strategy.

Assess your goals and let your strategy reflect them. It’s important to analyze what you really want to accomplish during your retirement years, and to be realistic about the cost of pursuing those goals. Don’t assume significantly more risk simply because you have expensive goals, but this is one piece of the equation to keep in mind.

Feel comfortable with your strategy. Consider your tolerance for risk, and be prepared for market volatility if you choose a more aggressive approach to investing. This should be carefully discussed with your financial advisor, so that together you can develop an approach that is right for you and your portfolio.

Source: Investment Company Institute, 2011

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

Balancing Growth and Stability

Balancing Growth and Stability

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About the Author: Mark Roberts