Your Investment Portfolio and its Purpose


Your Investment Portfolio can represent so many things; a lifetime of disciplined achievement, your dream home, your comfortable retirement and so on. On one hand, you may not want to risk these savings to the vagaries of the markets. On the other hand, you may understand that markets have historically rewarded long term investors by increasing the value of your portfolio and providing some protection against rising costs.

Your investment portfolio should be designed to complement your Plan and should consider the need for income, your tax situation, the need for portfolio longevity as well as its role in your estate. Striking the appropriate balance between the return you desire and the risk you take (i.e. the loss of your principal) is one of the most important decisions you will make in building your Plan. You may have 401-k's, IRA's, mutual funds and other investments, the question is how do they fit in? You see your investment statements and you may even be paying taxes on your returns. Perhaps the first thing to know is that your investment portfolio can be considered a subset of your overall wealth management plan. No different than insurance, real estate or other assets, your portfolio should complement your overall financial picture.

One of the benefits of your investment portfolio is that there are multiple strategies that can be implemented and can be readily adjusted to fit your evolving circumstances. You may hear discussions surrounding investment returns, active versus passive money management, among other investment topics. While all of these may have their place in the investment world, the first thing an investor should do is to understand their own situation. For example, you should know what you are hoping to accomplish with your portfolio, over what time frame, your comfort level with various investment choices and how this fits into your big picture. The good news is that the Wealth Management process takes all of these items into account as well as helping you understand and design your Financial Plan. Your portfolio can and should be designed to help you achieve this plan.