Is Your Investment Portfolio Meeting Your Needs?

Take time for an investment check up!

When was the last time you looked at your investments?  Has it been a year or more since you last reviewed your investment portfolio?

Investment philosophies and approaches vary, at Wealth Planning Corporation we follow a time-tested formula to help clients achieve their wealth goals through a disciplined long-term approach using diversified asset allocation models and rebalancing. Our investment management is not a passive “set it and let it run” process. In addition to rebalancing, portfolio monitoring is integral to our process.

Let’s answer a few basic investment questions:

1. What is diversification?

  • Being allocated among different asset classes to minimize volatility and achieve expected returns. Some of the asset classes we hold in our models are U.S. equities, fixed income,
    alternatives, real estate (REITS) and international funds. A diversified portfolio has a mix of assets.

    • Action: Review your portfolio holdings, do you have the right mix of assets?

2. What is rebalancing?

  • Basically, it is to sell an asset class when it has run up or exceeded its original target percentage; then buy those assets which have fallen below their target percentages. Rebalancing is usually completed multiple times throughout a year (varies based on market activity). This process is used to correct an allocation percentage mismatch while reducing the risk of overexposure to any one asset class.
    • Action: Review your target percentages, are they within range given all the volatility?

3. What is risk tolerance?

  • The willingness to accept or avoid risk. With investing is the relationship between risk and return that we discuss with clients. The greater the amount of risk an investor is willing to take, the greater the anticipated potential for return. Risk can come in various ways and investors need to be compensated for taking on additional risk. Risk includes the possibility of losing some or all an original investment.
    • Action: Review your overall risk level: are you comfortable with your return and investment portfolio volatility metric?

4. What is the time horizon?

  • The length of time leading up to retirement as well as the length of time in retirement. When and for how long the investment portfolio will need to produce income or fulfill all the client’s wealth goals.
    • Action: Review your short-term and long-term goals relative to your resources

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