A good wealth manager stays active in your retirement portfolio because they must stay on top of all aspects of wealth accumulation strategies. The process of wealth accumulation is based on positive returns on investments generating more wealth, while limiting the factors that not only decrease wealth but make it difficult to regain. The first step is to analyze the needs you have now and anticipate those you’ll need in the future to establish a long-term wealth accumulation strategy:
1. Diversify investments with wealth accumulation as the goal. This strategy is designed to use your investments as a hedge against inflation mixed with opportunities that seek to maximize growth.
2. Seek to deliver consistent performance over the longer timeframe. Remember you are investing over a period of years not months, so seek investments that are designed with the goal to offer long term growth.
3. Pursue stable enough returns so that when withdrawals are scheduled, they won’t significantly affect long-term performance. A good example of this is Required Minimum Distributions, which you are required to take out after age 70.
4. Work with different asset classes for an “optimal” mix of assets to preserve wealth. Money market and government bonds offer lower volatility, but are still open to interest rate risk and price availability. Commodities can offer a greater return potential on investment, but tend to be volatile and are less liquid than other assets.
While less volatile than commodities, stocks are vulnerable to economic growth risk, and returns to stocks are relatively inconsistent. The key is to build on the strengths of each class and seeking to minimize the shortcomings. This approach seeks to provide the lower volatile performance you’re striving for over an investment lifetime.
5. Increase your personal savings. One immediate way to boost your savings is to set money aside on a regular basis. By staying disciplined and contributing regularly, the savings you build up combined with the compounded interest you can earn can prove to be a nice addition to your overall retirement income.
A long-term wealth accumulation strategy is crucial for a successful retirement. Make sure you discuss the plans for your future with your financial advisor. If you’re looking for a CERTIFIED FINANCIAL PLANNER™ professional, I invite you to visit us at mooneylyons.com. Although there is no guaranteed way to eliminate risk, there are strategies you should follow that aim to preserve and grow your retirement nest egg.
Investing involves risk including the loss of principal.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.