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.