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Tailoring
Investments For You
Many fashions that are attractive on a 20-year-old would make a 50-year-old
look foolish, and vice versa. Throughout your life, you alter the way
you dress to keep pace with the changes you've gone through. Well, just
as you adjust your clothing styles over the years, you need to tailor
your investments to life stages and modifications in your goals, timeline
and risk tolerance. The way you divide your money among the three major
assets classes---stocks, bonds and cash equivalents---should shift to
reflect your changing circumstances. An asset allocation that's good
for people in their 30s could spell disaster for retirees; the reverse
is also true.
Selecting a Portfolio Suited to Your Needs
Unfortunately, deciding how to structure your portfolio is not as simple
as looking up an asset allocation chart for your age. No single mix
of assets is right for everyone at a given age. The asset mix you choose
will depend on:
- Your goals. Are you saving for a lavish wedding? Your
dream home? A comfortable retirement?
- Your investment horizon, or the amount of time before
you'll need those funds.
- Your risk tolerance. Your investments shouldn't keep
you up at night, worrying. But investing too conservatively could
leave you stranded short of your goal.
- Personal circumstances, such as other assets available
to you and your financial responsibilities.
- Your tax situation and tax laws, which change frequently.
- Economic conditions, interest rates and other market
factors.
Mix and Match: Choosing What's Appropriate
Stocks historically have earned the highest returns of the three asset
classes. So, you may want to lean more heavily on them if your goal
is many years distant and you need substantial growth. Stocks have also
been the most volatile of the three asset classes, meaning their prices
have seen the widest swings. But if your timeline is long, you'll have
time to ride out the ups and downs. Bonds produce current income but
historically have not shown as much growth potential as stocks. Cash
equivalents, such as money market funds or Treasury bills, are an even
more conservative investment, but they offer liquidity--quick, easy
access to your money. Typically, the returns of the three asset classes
react differently to changing market conditions. So, by spreading your
money among all three, you may be able to offset declines in one class
with increases in another.
We'll Help with a Perfect Fit
A visit with a Union Bank & Trust investment
professional can help you decide on an asset allocation that's appropriate
for you. He or she can also help you keep tabs on your portfolio through
the years, and suggest changes when appropriate.
*Investment
services offered through Union Bank & Trust Company’s Trust Division.
Investment products: Not FDIC Insured - No Bank Guarantee - May Lose
Value.
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