How to Achieve Your Financial Goals with Wealth Building Strategies

How to Achieve Your Financial Goals with Wealth Building Strategies

April 13, 2017
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As an independent financial advisor, I talk with people – clients, friends, family – about financial goals. Now and then I find someone who thinks that achieving success with their investments is a matter of luck or timing – like “hitting the jackpot.”

I am very careful to dispel the notion that choosing the hottest stocks is the secret to long-term financial security. It’s kind of like attributing your success in a 5K race to your selection of shoes rather than all the time and conditioning required.

The truth is that the success of your investment usually depends on the quality of your asset allocation.   


What Is Asset Allocation?

Put simply, asset allocation means that you invest your money in different categories of financial instruments, like stocks, bonds, or money market funds. By diversifying your assets, you ensure that you won’t lose all your money if one type of investment turns sour. A good asset allocation plan will help you reach your long-term wealth goals while staying within your capacity for risk.

Asset Allocation and Personal Financial Planning

In general, the younger you are, the greater percentage of your assets should be in the stock market, as that's likely to grow faster than most alternatives. As you age, it makes sense to shift some assets into bonds, which tend to increase more slowly but can offer a little more stability and diversification. It's also smart to have some cash on hand for emergencies or to be able to take advantage of opportunities quickly. Think about that unaffordably priced stock that temporarily plunges in price or a downturn in the entire market.

So, asset allocation is a long-term wealth building strategy whose merit lies in being secure enough to give your investments time to grow over a period of many years. 

Should I Hire an Independent Investment Advisor?

For the vast majority of people, the answer is yes. Just like you wouldn’t represent yourself in court, or allow yourself to be operated on by a non-qualified surgeon, you shouldn’t tackle your investments without the help of a qualified professional. 

Diversifying your portfolio isn't the easiest thing to do. There are large-cap stocks, small-cap stocks, growth stocks, municipal bonds, corporate bonds, government bonds, foreign stock, foreign bonds, as well as numerous other financial instruments that go into a diversified portfolio. Additionally, the balance of each of these in your portfolio depends on a thorough and technical market analysis that is often impossible for the layman to perform.
Investment plans are only one small part of your total wealth management strategy. Real estate, insurance, retail banking, and normal day-to-day financial planning are other aspects that your strategy will have to take into account. Hiring an independent financial advisor who can coordinate all the different processes under one roof, will help make sure your financial plan is efficient and propelling you towards your wealth goals in the best possible way. 

Have questions? Get in touch today!

Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.