The Importance of Portfolio Fit

Many individuals neglect to evaluate whether their portfolios align with their financial goals:

• Regular Checkups: Only 42% of people regularly review or rebalance their portfolios, leaving them vulnerable to misalignment.
• Diversification: Reassessing and rebalancing portfolios ensures they remain diversified and tailored to your age and objectives.

Average Account Balances and Savings Rates

Understanding average savings rates and benchmarks can help you assess your progress:

• Account Balances: Average balances vary significantly by age, with $100,000 for those in their 40s and $160,000 for those in their 50s.
• Savings Rate: The average rate is 8.9%, but aiming for 15-20% of income is ideal, especially if you’re catching up.

Asset Allocation by Age

Asset allocation is key to ensuring your portfolio is age-appropriate:

• Younger Investors: Those in their 20s should have around 90% in stocks for growth.
• Older Investors: As you age, shift towards more bonds and cash to reduce risk.
• Common Mistakes: Data shows that people in their 60s and 70s often have portfolios resembling those in their 30s, indicating a mismatch.

Cash and Bond Allocations

Cash and bonds play specific roles in a well-balanced portfolio:

• Cash: Should primarily be for emergencies or short-term needs, not long-term investments. However, many portfolios have around 28% in cash across all age groups.
• Bonds: Only about 10% of portfolios for those in their 50s and 60s are in fixed income, despite its ability to provide stability and income.

The Importance of Global Diversification

Most portfolios are heavily weighted in U.S. stocks, creating unnecessary risks:

• Home Bias: Around 80-85% of portfolios are in U.S. stocks, with only 15-20% in international markets.
• Balanced Approach: Consider allocating two-thirds to domestic stocks and one-third to international stocks to reduce risk and tap into global growth opportunities.

Retirement Savings Benchmarks

Benchmarks help track whether you’re on target for retirement:

• By Age 30: Aim to have one times your income saved.
• By Age 40: Increase to three times your income.
• By Age 60: Strive for eight times your income.
• Tax Diversification: Use a mix of tax-deferred, tax-free, and taxable accounts to enhance flexibility.

Dollar Cost Averaging for Long-Term Growth

Investing consistently over time mitigates market timing risks:

• How It Works: Dollar cost averaging involves investing a fixed amount at regular intervals, averaging out market highs and lows.
• Benefits: This strategy reduces the emotional aspect of investing and builds discipline.

Avoiding Common Portfolio Mistakes

Portfolio management requires avoiding these key errors:

• Overweight Cash: Too much cash limits growth potential.
• Underweight Bonds: Skimping on bonds can increase volatility and reduce income stability.
• Market Timing: Trying to time the market often leads to missed opportunities and lower returns.

Conclusion

Ensuring your retirement portfolio aligns with your goals requires regular review, proper asset allocation, and strategic diversification. By addressing common blind spots and implementing these strategies, you can create a portfolio that grows with you and secures your future. Start optimizing your retirement portfolio today to achieve long-term success.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Ensure Your Retirement Portfolio Matches Your Goals: Key Strategies for Success appeared first on ROI TV.

Why International Investing Matters

Most investors have a “home bias,” preferring domestic stocks due to familiarity. However, limiting investments to U.S. stocks can hinder portfolio growth and diversification:

• Diversification: Adding international investments can reduce portfolio volatility and provide exposure to different economic cycles.
• Potential Higher Returns: Historical data shows international markets often outperform U.S. markets at certain times, making them valuable for long-term growth.

The Power of Diversification

A globally diversified portfolio can significantly reduce risk and enhance returns:

• Broader Exposure: International portfolios can include up to 8,000 stocks from 46 countries, compared to the S&P 500’s 500 companies.
• Reduced Concentration Risk: While the S&P 500 is heavily concentrated in five companies (24% of the index), international indices offer broader exposure, with the top five stocks comprising only 7%.

Historical Performance of Global Markets

International investing has consistently demonstrated its value through historical performance:

• Global Leaders: Finland topped performance charts five times in the past 20 years, while U.S. stocks led only once.
• Emerging Market Returns: From 2000 to 2010, U.S. stocks averaged 1.4% annually, compared to 3.5% for international markets and over 15% for emerging markets.

Addressing Risks of International Investing

While international investing offers advantages, it’s essential to understand the risks:

• Political Instability: Some regions may experience unpredictable political changes.
• Currency Fluctuations: Exchange rates can impact returns, especially in emerging markets.
• Regulatory Differences: International markets operate under varied regulations, requiring thorough research.

Types of International Markets

International markets fall into two categories, each offering unique benefits:

• Developed Markets: Countries like Canada, Germany, and Australia provide stability and lower risk.
• Emerging Markets: Nations like India, Brazil, and China offer higher growth potential but come with greater risks.

Investment Vehicles for Global Exposure

There are several options for gaining international exposure:

• Global Mutual Funds: Include both U.S. and international investments.
• International Mutual Funds: Focus solely on non-U.S. markets.
• ETFs: Offer transparency, low costs, and diversified exposure to specific markets.

Practical Tips for Successful International Investing

Investing globally requires due diligence and strategic planning:

• Research Thoroughly: Understand the companies, markets, and sectors within your chosen funds or ETFs.
• Consult Experts: Work with a financial advisor to create a personalized global investment strategy.
• Start Small: Gradually add international exposure to your portfolio to manage risks.

Resources for Global Investing

To help you get started, the Your Money, Your Wealth team offers a free Global Investing Guide. This comprehensive resource provides insights and strategies to help you navigate international markets with confidence. Download the guide on their website and take the first step toward a diversified portfolio.

Conclusion

Global investing is an essential strategy for achieving diversification and reducing portfolio risk. By understanding the benefits, risks, and historical performance of international markets, you can make informed decisions that enhance your financial future. Start exploring global opportunities today to build a stronger, more resilient portfolio.

Intended for educational purposes only. Opinions expressed are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. Neither the information presented, nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Consult your financial professional before making any investment decisions. Opinions expressed are subject to change without notice.

IMPORTANT DISCLOSURES:

• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, LLC. A Registered Investment Advisor.

• Pure Financial Advisors, LLC. does not offer tax or legal advice. Consult with a tax advisor or attorney regarding specific situations.

• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.

• All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy.

• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

The post Diversify Your Portfolio with Global Investing appeared first on ROI TV.