Generally, you should leave the construction of an investment portfolio to your professional investment advisor, especially if you are investing a significant percentage of your total wealth, or if you’re relying solely on the success of your portfolio to meet your future financial goals. However, whether you or your advisor designs your portfolio, consider a few of these well-recognized guidelines.
The term “time horizon” refers to how long you plan to keep your money invested. Your time horizon affects your portfolio design because the longer you plan to keep your money invested, the easier it may be for you to ride out dips in the market. You may be able to tolerate more volatile investments, with potentially higher returns (though time alone is no guarantee of higher returns).
Your personal risk tolerance also affects your portfolio design. Can you sleep at night knowing that a sudden downward shift in the market could cost you a significant portion of your principal? If not, a portfolio that holds a high percentage of aggressive growth stocks, for example, is not right for you. You should match investments to your personal level of risk tolerance.
Your personal liquidity needs may eliminate some investment choices. If you periodically need access to your investment dollars, it makes no sense to design a portfolio dominated by assets that can’t be readily sold or whose value can fluctuate dramatically. Instead, you’ll need investments that can be converted to cash easily and quickly.
If you have questions or need assistance, contact the experts at Henssler Financial:
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- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
