Nicholas Rose

Nick Rose is a Financial Advisor for Pure Financial Advisors. As a Financial Planner, he strives to understand, listen to, and educate his clients. Nick strives to identify strategies that best fit his clients' unique situations. He works hard so that his clients feel in control about their future. Before beginning his career, Nick earned [...]

Your asset allocation will evolve as your financial life, timeframes, and comfort with investing changes. Pure’s Financial Planner, Nick Rose, CFP®, AIF®, talks about the importance of having the proper mix of investments in your portfolio to optimize your money’s growth regardless of age and economic circumstances.

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Asset Allocation: A Balancing Act

This is the mix between aggressive and conservative investments. This is typically represented as the percentage of stocks, bonds, and other types of investments in your portfolio. Your asset allocation will evolve as your financial life, timeframes, and comfort with investing changes. Having the proper mix of stocks and bonds in your portfolio is recommended to optimize your money’s growth regardless of economic circumstances.

Saving is the first step in securing the funds you’ll need to enjoy your golden years. How much you need to save largely depends on your current lifestyle and the lifestyle you want to live when you retire.

The 4% rule:

Many experts estimate that, in general, 80% of your pre-retirement income is needed in retirement. That means if you make $100,000 before retirement (after taxes and inflation), you will need $80,000 a year to live in retirement. You can use the 4% rule as a guide to determine how much money you will need create $80,000 in income. So, using the 4% rule, divide income needed by 4%, you would need $2 million in your portfolio at retirement. This rule assumes you can average a return on your investments greater than 4%. Most people report they are far behind on the amount of money they should have tucked away for retirement.

A diversified portfolio:

Once you start saving you must decide how you will invest and grow your savings. Having a diversified portfolio is essential in maximizing the potential of your investments. As crucial as diversification is to an investment portfolio, most people admit they don’t know if their investments are diversified.

Hypothetical Allocations by Age:

30’s/40s: 80 to 100% in stocks the remainder in bonds

50’s: 65 to 85% in stocks the remainder in bonds

60’s: 45 to 65% in stocks 30-50% in bonds 0-10% cash

70’s: 30 to 50% in stocks 40-60% in bonds 0-20% cash

A “set it and forget it” approach hasn’t been shown to maximize your investment dollars as you meet your financial goals. As you age, your needs, goals, and risk tolerance can change, and so should your asset allocation. As you progress through life make sure to reassess and rebalance your investments along the way. You can find out if your portfolio is properly balanced, contact Pure Financial today for a free financial assessment.

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• 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 your 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.

CFP® – The CERTIFIED FINANCIAL PLANNER™ certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® designation, an individual must satisfactorily fulfill education, experience and ethics requirements as well as pass a comprehensive exam. Thirty hours of continuing education is required every two years to maintain the designation.

AIF® – Accredited Investment Fiduciary designation is administered by the Center for Fiduciary Studies fi360. To receive the AIF Designation, an individual must meet prerequisite criteria, complete a training program, and pass a comprehensive examination. Six hours of continuing education is required annually to maintain the designation.