Time waiting for the perfect portfolio can cost you…….
Searching for the ideal set of circumstances (which never seem to materialize) can prevent you from doing the important investment planning that is necessary for your financial health. So can waiting for that promotion at work, or letting the tax tail wag the investment dog.
Are any of these items keeping you sitting on the sidelines?
• Every investment carries risk. There is no “perfect” investment that provides high returns with no risk. That’s why you define your financial goals up front, and over time adjust your risk profile to fit the facts of your age, employment, and desired retirement lifestyle. Adjusting risk is all about diversification and asset allocation. And revisiting the plan on a regular basis.
• Fear of implementing the plan until the portfolio is perfect. Different investment firms may all have different investment strategies based on your goals, income, risk tolerance and timeline to retirement. There is no perfect equation or foolproof strategy. There are however, guiding principles like:
o Not allocating one’s capital exclusively to illiquid investment vehicles or unregulated opportunities.
• Waiting for the ideal career move or promotion. Always take advantage of your company’s corporate retirement plan. If you are constantly waiting for your cash flow to improve to save for retirement you miss out on the benefits of compound interest. Budget properly and put money away while early in your career to allow those dollars to grow meaningfully over time.
• Letting the tax tail wag the investment dog. We spoke of this above. Sometimes it makes sense to stall on an investment decision or portfolio change due to the tax ramifications. At TFGFA, we strive to keep our clients transactions tax-efficient. However, having to pay tax should not paralyze you. Waiting for losses to offset gains before making changes may put you in a poor position when continuing to hold undesirable positions. Remember that certain investments are more tax efficient than others. Construct your portfolio wisely, using tax-advantaged accounts for securities that are more susceptible to high taxes and allocating more tax efficient investments into the taxable accounts.
CONTACT US: No matter what your situation, our TFGFA financial advisory team will work with you to help you build a tax–efficient, well-diversified portfolio, allocated and tailored to your risk profile. And then adjust it as necessary. We are in constant communication with our clients and when adjustments are called for, we have the ability to help them adapt their financial plan to changing circumstances. Feel free to contact me, Cory Lyon, Financial Advisor, directly at 561-209-1120, with any questions regarding financial planning. At TFGFA, we believe in a 360 degree approach to portfolio design and personalized asset management. I act as a fiduciary for my clients.
TFG Financial Advisors, LLC is a registered investment advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results. Investments involve risk and are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.
