When should I shift to conservative?
By LouAnn Schulfer, AWMA®, AIF®
Investment objective is a critical component of wealth management. One of the more frequent questions we receive is, “At what age should I be shifting my investments more conservative?” Prudent investing has something to do with age, but in fact has more to do with your time horizons. Regardless of age, typically we all have short-term, mid-term and long-term financial goals. Whether you are 15, 45 or 75, money that you plan to use in the next two years should be tucked away where the value is not subject to fluctuations that would disappoint you if the account dips when you need the money. In other words, this should be your most conservatively invested capital. Generally speaking, for monetary goals within two to ten years, we recommend a moderate investment objective, where you would not expect either home runs or strikeouts. Your long-term money should be invested in growth strategies that are appropriate for you. I have clients who have accounts that are intended to be multi-generational, in place for their children and grandchildren. In that case, their age is not a concern. Investing too conservatively would not align with their decades-long intention for the funds.
You run the risk of loss if you invest your money too aggressively and need to sell investments when the markets are down. You run the risk of not optimizing the potential for reaching your goals if you invest too conservatively and miss out on opportunities for long-term growth. Both are risks. Rather than your age, let your goals and time frames guide you as to when you should shift to be more conservative.
LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or [email protected]. www.SchulferAndAssociates.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
No strategy ensures success or protects against loss.