Since the beginning of the global economic meltdown that began almost three years ago, investors have started voicing a few serious concerns about the status of their retirement portfolios. Investors wonder whether or not they should convert all of their investments into cash, whether the US dollar even a safe bet anymore, or whether or not they should begin investing in foreign stock markets. While it is certainly true that every financial planner would give you a slightly different answer, just about all of them will stress the importance of properly designed wealth management strategy.
What is Wealth Management?
When it comes to popular investing strategies, the ‘smart’ thing to do is almost always a function of what stage of life you are currently in. Wealth management strategies hone in on the various life stages in which the investor is currently in and combines them with other crucial elements, such as the investor’s tolerance for risk, to map out a plan that will help them reach their financial goals and objectives.
Wealth Management Sample Portfolio Ideas
30-Year Old Single Individual
At one time, many financial planners seemed to always recommend that younger investors allocate approximately 20 to 25% of their investment dollars overseas. With the massive debt issues in Europe, however, most are dialing down this percentage to around 15%. Furthermore, as a 30-something has approximately 30 years left until retirement, they should plan to keep around 65% of their investments in US stocks.
45-Year Old Married Couples with Children
With the proliferation of college savings accounts, such as the 529 plan, many married couples have already socked a good chunk of change away for their children’s education. As such, these investors should have a more moderate approach to investing. It would be safe to argue that a 50% allocation to US stocks and a 15% allocation to foreign stocks would be warranted in this stage of life.
65-Year Old Retired Couple with a Large Retirement Portfolio
Chances are that investors that have been regularly investing for decades have amassed a sizeable retirement portfolio. Even at this stage in life, however, proper asset allocation is crucial to the success of any wealth management strategy. As such, a portfolio consisting of 45% US stocks, 20% foreign (or alternative) investments, 20% bonds, and 15% cash is often recommended. Financial planners note that even though stocks have generally outpaced inflation they like adding in a healthy dose of bonds as a way to diversify away some of the risk.
Designing a proper wealth management strategy involves numerous factors that cannot be completely covered in any basic overview. As such, it is always a good idea to consult with a certified financial planner in order to ensure your portfolio meets all of your goals and expectations.
