The best investment strategy is one you can commit to long-term while achieving your goals. Pure’s Financial Advisor, Brian Wolff, CFP®, AIF®, offers practical steps to optimize your portfolio in 2025. By applying these ideas to your plan, and you’ll be on track for a more effective, streamlined investment approach.
Transcript
We all want better investment performance, but research shows that it’s time in the market, not market timing, which matters most in achieving that goal. Creating a plan that incorporates a disciplined approach to investing is a great first step toward avoiding mistakes that can negatively impact your long-term returns. According to a 2022 Harris Poll, people who self-identify as a disciplined financial planner, not only reported lower levels of financial anxiety, but also higher levels of happiness.1
So, here are a few tips to optimize your portfolio, help you stay disciplined, and hopefully be a little bit happier as you head into the new year.
Focus on Your Overall Investment Mix
The financial landscape is constantly changing, whether it’s from economic factors, geopolitical events, or innovative technologies. Which is why once you’ve committed to start saving for retirement, the next most crucial decision is how you’ll invest your money to account for these changes.
When constructing your portfolio, focus on finding the proper target allocation of stocks and bonds you’d be comfortable with — even in a down market. Evaluate the risk versus reward of any potential allocation and how it fits into your risk tolerance and time horizon. Having a long-term perspective can help resist the temptation to react impulsively to short-term market fluctuations, which can adversely affect your returns.
Diversify Across Asset Classes
Diversification of your holdings helps mitigate risk inside the portfolio and capitalizes on diverse growth opportunities. Investing in thousands of companies, over a number of asset classes, helps ensure that one bad stock pick won’t sink your retirement plans.
Optimizing your portfolio through diversification involves creating a customized plan that helps achieve your specific goals. Determining the types of investments, like stocks, bonds, mutual funds, or alternatives such as hedge funds or Real Estate Investment Trusts, the size of the companies you’re investing in, or where they’re located on the globe can help further enhance the diversification inside your portfolio.
Consider Taxes
Be mindful of the tax implications of your investments upon distribution, as determining whether to invest on a pre-tax or after-tax basis can help improve the efficiency over time and potentially keep more money in your pocket.
Running a tax projection that can estimate your tax brackets today, and in retirement, can help determine which strategy is more effective.
Monitor and Rebalance Your Portfolio
Make sure to regularly monitor and rebalance your portfolio to account for any changes in your life and market conditions. Evaluate your portfolio’s performance at least twice a year and before making any changes remember that long-term progress toward your goals is more important than short-term portfolio performance.
If the portfolio needs to be rebalanced having a prescribed, disciplined approach on how to go about it can avoid emotional trading that can lead to potential mistakes. Remember, rebalancing is not going on a buying and selling spree; it’s managing risk.
Another thing to consider is that in times of economic uncertainty, you may want to review your portfolio more often.
Choose Appropriate Benchmarks
Lastly, the key to choosing the right benchmark is to know which one best tracks securities similar to the holdings inside your portfolio. You should consider factors like risk profile, asset class allocation, and market dynamics when determining which fund is most appropriate to track. Try not to compare your portfolio to a benchmark that isn’t an apples-to-apples comparison, such as using a 100% stock benchmark when your portfolio has a sizable percentage of bonds.
Ultimately, the best investment strategy is the one that you can stick with long-term that achieves your goals. By applying the ideas we’ve presented into your own plan, you’ll be well on the way to a better, more optimized, portfolio.
If you’d like help with these or any other financial matters, contact Pure Financial Advisors for a free financial assessment.
1 Northwestern Mutual, “Study Links Financial Discipline to Greater Happiness and Better Sleep”, July 2022, https://news.northwesternmutual.com/2022-07-07-Study-Links-Financial-Discipline-to-Greater-Happiness-and-Better-Sleep.
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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 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.
• Charitable gift annuities typically pay lower interest rates than regular annuity products, they are irrevocable and are only safe as long as the charity is around.
CFP® – The CERTIFIED FINANCIAL PLANNER® certification is by the Certified Financial Planner Board of Standards, Inc. To attain the right to use the CFP® Certification, 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 certification.
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.
