Re­view Your In­vest­ment Ob­jec­tive

The Sentinel-Record - HER - Hot Springs - - HER FAMILY -

Pe­ri­od­i­cally re­view­ing your in­vest­ments to en­sure they are on the right track is an im­por­tant and mean­ing­ful mea­sure in work­ing to­ward your fi­nan­cial goals. Here is a sim­ple but valu­able way to get more from your in­vest­ment strat­egy. When your next bro­ker­age state­ment ar­rives, check your ac­count pro­file to make sure that all the sec­tions are ac­cu­rate and up to date. This in­cludes your in­vest­ment ob­jec­tive, risk tol­er­ance, and time hori­zon. In­vest­ment ob­jec­tive. Fo­cus­ing on your in­vest­ment ob­jec­tives helps us align the other parts of your in­vest­ment strat­egy —risk tol­er­ance, time hori­zon, and liq­uid­ity needs — ap­pro­pri­ately. Our as­set al­lo­ca­tion mod­els are grouped within three over­ar­ch­ing port­fo­lio ori­en­ta­tions: In­come: Port­fo­lios that em­pha­size cur­rent in­come with min­i­mal con­sid­er­a­tion for cap­i­tal ap­pre­ci­a­tion. They usu­ally have less ex­po­sure to his­tor­i­cally more volatile growth as­sets. Growth and In­come: Port­fo­lios that em­pha­size a blend of cur­rent in­come and cap­i­tal ap­pre­ci­a­tion. They usu­ally have some ex­po­sure to his­tor­i­cally more volatile growth as­sets.

Growth: Port­fo­lios that em­pha­size cap­i­tal ap­pre­ci­a­tion with min­i­mal con­sid­er­a­tion for cur­rent in­come. They usu­ally have sig­nif­i­cant ex­po­sure to his­tor­i­cally more volatile growth as­sets. Risk tol­er­ance. Every­one is dif­fer­ent when it comes to fac­tor­ing risk into their in­vest­ment strat­egy. Each in­vest­ment ob­jec­tive can be tilted to­ward as­sets that tend to be more or less volatile. Risk tol­er­ance is the amount of risk you're will­ing and able to ac­cept in order to help achieve your fi­nan­cial goals. Risk tol­er­ance should be viewed along the fol­low­ing con­tin­uum: I) Con­ser­va­tive in­vestors ac­cept the low­est amount of risk. 2) Mod­er­ate in­vestors seek a bal­ance be­tween sta­bil­ity and ap­pre­ci­a­tion in their port­fo­lio. 3) Ag­gres­sive in­vestors ac­cept a higher risk for losses while seek­ing greater po­ten­tial for re­turns. Time hori­zon. How long do you plan to in­vest be­fore you'll need the money? The an­swer, of course, de­pends on your stage in life and your goals. Your time hori­zon is the ex­pected num­ber of months, years, or decades you plan to in­vest to­ward your fi­nan­cial goals. Time hori­zon is gen­er­ally ex­pressed as:

• Im­me­di­ate — Less than 1 year

• Short-term — 1 to 3 years

• In­ter­me­di­ate — 3 to 5 years

• Mod­er­ate — 5 to 10 years

• Long-term — More than 10 years When check­ing your port­fo­lio's align­ment, it's also a good idea to make sure you've ac­counted for your liq­uid­ity needs. Liq­uid­ity mea­sures the ease with which you can meet fi­nan­cial obli­ga­tions with your avail­able liq­uid as­sets. For ref­er­ence, cash is the most liq­uid as­set, while real es­tate, fine art, and col­lectibles are all rel­a­tively illiq­uid. Liq­uid­ity needs in­clude:

• Sig­nif­i­cant (pri­mary need is liq­uid­ity)

• Mod­er­ate (may need quick ac­cess to cash)

• None (have other sources of cash) When build­ing your port­fo­lio, it can be tricky to fig­ure out if you're get­ting the best re­turn for your risk level. Talk with your fi­nan­cial ad­vi­sor to make sure your strat­egy is on track to help achieve your goals.

Our firm does not pro­vide le­gal or tax ad­vice.

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