Before any recommendations are made with regards to your specific investments, it is important to complete a Financial Planning review to determine important information. What rate of return do you require to achieve your financial goals? When will you need access to this money? What is your risk tolerance sleep at night factor with regards to changes in the value of your investments?
Your financial goals should be divided into 3 time horizons:
|Short Term ||Medium Term ||Long Term |
|Example: I need this money to fund my new car in 2 years ||Example: I need this money to fund my child's education in 6 years ||Example: I need this money to fund my retirement in 15 years |
Matching the specific investment recommendation to your time frame is one of the most important considerations. Asset allocation is the process of not putting all of your investment eggs in one basket. Your shorter term bucket will have lower risk and liquid investments, and your longer term bucket will include more growth investments with a long term time horizon in mind. Asset allocation smooths out the ups and down of your overall investment strategy.
It is important to have a disciplined approach to investing. Re-balancing your portfolio on a 6-month basis is recommended. This will ensure that you are disciplined to make the right decisions as market conditions and the value of your investment account changes. When the equity positions are up, we will take profits and move back to fixed income (ensuring that we are selling high). When equity positions are down, we will take advantage of lower temporary prices on quality investments and move from fixed income to equities (ensuring that we are buying low).
Regular meetings and review will ensure that your plan is continuously monitored and always up to date. Life changes and we need to be able to have flexibility to adjust your financial plan and investment strategies in the future.