When is the last time you closely reviewed your investment strategy? Often times an investor will pick an investment allocation and set their savings on autopilot. While this can be a great routine to create healthy savings habits, it is important to periodically check in to be sure what you own is in line with your expectations. Just as you have likely experienced many changes from age 35 to age 55, your investment strategy should evolve to grow with your changing needs as well.

Here are a few things to keep in mind as you review your current investments:

  • Your risk tolerance: Consider taking a risk assessment to understand your true needs and expectations for your investments to compare with your current positions. If you are married, involve your spouse in the conversation as well to align your collective goals with your investments, as it is very common that one partner tends to prefer more risk than the other.
  • Time to retirement: During our working years, we often are comfortable taking on some level of risk in our investments. With a long timeline leading to our retirement goals, we can shoot for the fences with time to rebuild or rebound from volatility. However, as you get closer to your retirement date, significant volatility can disrupt or delay our goals, so it is a natural progression for risk tolerance to become more conservative over time. It will require your action and involvement to adjust your investments to keep up with your needs.
  • Market cycles and emotional impact: There are two major emotions that drive investors to take action with their investments: fear and greed. It is important to recognize a natural tendency to invest more aggressively when markets are high and a fear to sell when markets are low. By allowing these emotions to drive investment decisions, you will not only be caught in the cycle of constant fluctuations from day to day, you ultimately will stand in your own way of letting the market work for you.

By having a strong and current understanding of your needs and goals, you are now ready to create a financial plan that can adapt to your unique situation. In our next article, we will share the framework for building your personal financial plan for retirement, to face today’s challenges and market while also serving your vision of retirement. Until then, feel free to give our office a call to discuss a review of your risk tolerance or investment goals today at (803) 547-7853 for our Charlotte office or (843) 757-9400 for our Hilton Head office.

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