SPRING 2017

Investing Before and During Retirement

T here are two phases in the lifecycle of a retirement portfolio:the time when you’re con-

tributing to it and the time whenyou’re using it to cover your livingexpenses. During each phase, thebasic challenge is deciding how toinvest your nest egg; and for that,there are three common approaches:

4Going with your comfortlevel. Most people have some

idea as to what investments appealto them, either because of the rate ofreturn they associate with them orhow much safety they seem to offer.Whichever it is, people tend to piletheir retirement funds in one place— which can cause problems ifthere is a significant decrease in thatinvestment.

4Using a one-size-fits-all for-mula. There are at least sever-

al of these formulas floating around.On the theory that the closer youget to retiring the more conservative

you should become, one says youshould subtract your age from 100,treat the result as a percentage, andput that portion of your portfolio instocks. Another suggests you sub-tract your age from 120. The appealof this approach is that it’s simpleand unambiguous. The downside isthat the results don’t take intoaccount the details of your circum-stances or the cyclical nature of mar-ket returns.

4Using a financial plan. Aplan includes all the details

How Much Should You Invest in Stocks?

O ne of the most often asked questions is how much of a person’s port-folio should be made up of stocks. That will vary depending upon a

number of different factors, including your age, current net worth, andpenchant for taking risks. Still, there are a few basic rules of thumb thatare worth adhering to.

If you’re saving for retirement, most financial advisors will recom-mend that the younger you are, the more of your portfolio should be allo-cated to stocks. When we’re young, taking risks tends to come along withless-catastrophic consequences than when we’re nearing retirement age.

Of course, age is just one factor that influences portfolio allocations,and there are more aspects that need to be taken into consideration tomake the right decisions. The best way to ensure your portfolio is proper-ly divided is to work with a financial advisor who is fully aware of yoursituation and can make educated suggestions about how to move for-ward with your investments. After all, a formula can only get you so far,and personal recommendations will always be more valuable than guess-work. mmm

FR2016-0517-0099

U C C E S S

the other two methods leave out.It’s by far your best bet for achiev-ing your retirement goals since ittakes your circumstances and thestate of the economy into account.

Before You RetireThe key factor is to determine

what rate of growth you need toachieve in your portfolio to retirewith a nest egg capable of support-ing you for the rest of your life onceyou no longer earn a paycheck. It’s

Continued on page 2

$

Copyright © 2016. Some articles in this newsletter were prepared by Integrated Concepts, a separate, nonaffiliated business entity. Thisnewsletter intends to offer factual and up-to-date information on the subjects discussed but should not be regarded as a complete analysis ofthese subjects. Professional advisers should be consulted before implementing any options presented. No party assumes liability for any lossor damage resulting from errors or omissions or reliance on or use of this material.

Marsha HarrisInvestment Advisor Representative

3960 New Vision Drive – BLDG KFort Wayne, IN 46845

260.338.2379 • Fax: 260.338.2567

www.UnifiedWealthPlanning.com

a balancing act between how muchyou can afford to put aside everyyear, how much growth will maxi-mize your nest egg, and how muchrisk you feel comfortable taking.

By analyzing these factors, agood financial plan produces a rec-ommended asset allocation strategythat specifies how much of yourportfolio should be invested instocks, bonds, cash, commodities,and real estate. The mix in whichyou invest aims at a target rate ofreturn and risk level that both meetsyour goals and makes you comfort-able with the year-to-year results.

In general, the younger you are,the more risk you can afford to takesince you will have many marketand economic cycles to smooth outyour returns. It’s not unheard of forsomeone in his/her 30s or 40s toinvest up to 70% or 80% of his/herassets in stocks. Conversely,younger people who are risk-aversemay be able to take less risk and putmore of their assets in CDs andbonds, as long as they have moremodest retirement goals.

It’s generally true that the closeryou are to retiring, the more conser-vative your portfolio should be. But this doesn’t suggest the preciseproportions to place into each assetclass, nor does it take into accountthe opportunities or challenges thatcurrent market conditions present.Those answers will come only whenyou get into the details of your cur-rent situation and future goals.

After You RetireBefore you retire, your asset

allocation strategy is driven largelyby the goal of creating the largestpossible retirement portfolio withinthe limits of your tolerance for risk.After you retire, the goal shifts tokeeping your retirement portfoliolarge enough to continue generatingthe supplemental income you’llneed for the rest of your life.

InvestingContinued from page 1

FR2016-0517-0099

While this shift means yourstrategy aims for less growth andrisk than in the accumulation stage,it’s usually a mistake to revert tothe most conservative strategy pos-sible. That’s because your portfoliogets eroded over time by:

4 Inflation, which means the real value of your portfolio (as

well as the buying power of theincome it generates) gets smallerevery year.

4Taxes on income and capitalgains in taxable accounts and

withdrawals from nonRoth IRAs.

4Withdrawals you make tosupport your lifestyle.

Because of this constant shrink-age, some portion of your portfolioneeds to be invested in stocks,which is a riskier asset class but theone that typically stays ahead ofinflation, taxes, and reasonable ratesof withdrawals.

Please call if you’d like to dis-cuss your situation. mmm

6 Steps to Get Finances under Control

Y ou probably know it’s timefor you to get serious aboutmanaging your finances,

but when it comes to getting start-ed — well, that’s the hard part. Butif you follow a few relatively sim-ple steps, you can put yourself onthe path to pursuing your financialgoals.  

Get Organized — Dedicate anafternoon to going through yourpaperwork and online accounts.Designate a central space forimportant financial papers and filethem in an organized way. Onceyou know where everything is,dealing with mundane financialtasks is much less stressful.

Find Out How Much YouHave — While you don’t need totrack what you have down to thepenny, you should add up every-thing, including cash in your bankaccounts, money in investments,and other things of value. Thentotal up all the money you owe onyour mortgage, credit cards, stu-dent loans, and other debts. Sub-tract what you owe from what youhave and you’ll know where youstand financially. Tracking thatnumber over time can help moti-vate you.

Track How Much You Spend— Keeping tabs on how much youspend will show you where yourhard-earned money goes and may

help you find ways to put yourcash to better use.

Pay Down Any Debt — If youhave debt, you need a plan for get-ting out of it. Look for ways to cutspending or boost your income soyou can make extra payments onyour debt. At the same time, lookat the financial behaviors that ledyou to rack up debt in the firstplace.

Start Saving for a Rainy Day— If you don’t have a savingscushion of three to six months ofliving expenses, now’s the time tostart accumulating those funds.You’ll also want to save for longer-term or more specific financialneeds, like retirement and/or a child’s college education.

Set Goals for the Future —Saving for the future and stickingto your financial plan will be easierif you have clear goals in mind.After completing the above steps,you should have a pretty goodidea of some of the goals youmight have, like paying downdebt, building up an emergencyfund, or getting on track for retire-ment. Having those goals in mindcan help you stay motivated andorganized financially.

Please call if you’d like to dis-cuss this in more detail. mmm

FR2016-0517-0099

run, they think having a diversifiedportfolio of investments shouldyield positive returns over time.

Conservative Investing —Conservative investors are morecautious than most. In their portfo-lios, they usually have a smallerportion of stocks and a greater portion of less-risky investmentslike bonds and cash. Conservativeinvestors typically won’t see dra-matic swings in their portfolio’svalue, but the trade-off for that issomewhat lower returns.

Aggressive Investing —Aggressive investors seek to maxi-mize returns by taking on a greaterdegree of risk in their portfolios,usually by having a greater alloca-tion to stocks. Aggressive investorsmust be comfortable with the possi-bility that the stock portion of theirportfolio may fluctuate wildly.

The Right Choice for You —Perhaps one of these philosophiesdescribes you perfectly. Or perhapsyou see yourself in several philoso-phies. Sometimes, people combinedifferent approaches to develop a unique approach that works forthem. For example, you might bean active investor who favorssocially responsible stocks. Or you might take a passive valueapproach.

The key point is that youshould understand what youbelieve about markets and howthey work before you ever buy asingle share of stock. Please call ifyou’d like to discuss stock investingin more detail. mmm

What Is Your Stock Philosophy?

B efore you start investing in stocks, make sure youknow what your investment

philosophy is. An investment phi-losophy sounds like it might be acomplicated thing to develop; but in reality, it is simply a consistentway of thinking about andapproaching the markets.

We’re all different, so there are as many different investmentphilosophies as there are investorsin the market. But most philoso-phies fall into a handful of broadcategories:

Active Investing — As thename implies, active investing is ahighly involved approach to invest-ing. Active investors may trade frequently and are constantly on the lookout for opportunities. Peo-ple who embrace this investmentphilosophy may be market timers.In other words, they believe thatthey can get better returns bywatching market trends and buyingand selling at the optimum time.

Passive Investing — Passiveinvesting is the opposite of activeinvesting. Rather than frequent buy-ing and selling, passive investorschoose investments with the ideathat they’ll hold them for the longterm. This is often referred to as abuy-and-hold strategy. Passiveinvestors need to be willing to do alot of initial research before choos-ing stocks and then have thepatience and fortitude to holdinvestments for the long term.

Value Investing — Valueinvestors are focused on findingstocks they believe have beenundervalued by the market andthus trade for less than they arereally worth — hence, they aregood values. Warren Buffett is aproponent of value investing. Valueinvestors need to be able to do a lotof research and really understandhow businesses and companieswork so they can make an informeddecision about whether a stock is

priced appropriately. Growth Investing — Just like

passive investing is the flip slide ofactive investing, growth investing is the inverse of value investing.Investors who are focused ongrowth look for stocks they believehave an above-average potential for earnings.

Contrarian Investing — As thename suggests, contrarian investorslike to go against the grain. If every-one is investing in tech stocks,they’ll do the opposite. If people arefleeing emerging markets, they’lllook to those regions as potentialsources of growth. In some ways,contrarian investors are similar tovalue investors, in that they believethat the market sometimes mis-prices equities. Contrarian investorsdon’t just buy unpopular stocks tobe different, though. Their choicesare based on research and theirbeliefs about where the market isheaded next.

Socially Responsible Investing— Socially responsible investorschoose stocks based not just on howthey think they’ll perform, but alsoon whether the company itself isdoing good in the world. Thatmeans different things to differentpeople. Some socially responsibleinvestors focus on environmentalissues, while others may avoid com-panies involved in certain indus-tries, like tobacco and firearms.Socially responsible investors don’tignore financial matters, but thosearen’t the only factors they considerbefore investing. 

Efficient Markets Philosophy— People who embrace an efficientmarkets philosophy believe that themarket is a well-oiled and highlyfunctioning machine. They thinkthat investors who seek to profitfrom mispricings are doomed to fail because the market incorporatesall available information almostinstantly. Because they believe markets will go up over the long

Tips for Diversifying

The Purpose of This Newsletter

FR2016-0517-0099

L ooking for ways to better diver-sify your stock portfolio? Here

are a few essential tips: Spread It Around — Investing

in a handful of companies youknow and trust, as well as some you are not as familiar with, can bean effective approach and will resultin a much more stable portfoliothan the alternative.

Stay out of Your Own Industry— It’s not uncommon for those whoare passionate about the industry inwhich they work to make stockchoices that fall within that space.The thing is, though, it’s oftensmarter to stay out of your ownindustry when purchasing stocks —especially from your employer. Youmay be able to afford to take therisk if your job is particularly stable,but then again, you may end upmaking a mistake that you’ll regretfor years to come.

Don’t Stop Building — Themost important thing you can do toensure a healthy portfolio is to keepbuilding it year after year. The tiphere is to build a balanced portfolio,which will help to iron out anykinks one or more of your stocksmay suffer.

Please call if you’d like to dis-cuss this in more detail. mmm

I hope you enjoy receiving my newsletter. It is intendedto complement and enhance the personalized serviceyou already receive from me. The newsletter’s main

objective is to ensure, regardless of busy work schedulesand travel plans, that each client receives at least a minimalamount of timely advice on a regular basis. I also hope itwill stimulate your thinking on issues related to your personal finances by providing you with articles on a variety of financial topics. Please feel free to call me withany questions or comments, particularly with regard to the applicability of an article to your personal financial situation.

Please be generous in sharing this newsletter with yourcoworkers, family, and friends. Feel free to call me with thenames and addresses of people who you believe mightenjoy receiving their own copy of the newsletter. mmm

Financial Thoughts

W hile 82% of men participatein their employer’s 401(k)

plan, just 76% of women partici-pate (Source: AAII Journal, April2016).

Among workers without aretirement plan, 83% indicate thatthe total value of their householdsavings and investments, includ-ing their home, is less than$10,000. In contrast, 35% of work-er with a retirement plan say thevalue of these assets is $100,000 or

more (Source 2016 Retirement Con-fidence Survey).

Approximately 48% of work-ers report that they have tried tocalculate how much money theywill need for retirement. Almost39% of workers simply guess athow much will be needed forretirement, rather than doing asystematic retirement-needs calculation (Source: 2016 Retire-ment Confidence Survey).

The percentage of workerswho expect to retire after age 65has increased from 11% in 1997 to37% in 2016. However, only 15%of retirees said they actuallyretired after age 65. Many retireesreport that they left the workforcefor reasons beyond their control,including health problems orchanges at their companies(Source: 2016 Retirement Confi-dence Survey). mmm­­

INVeSTMeNT ADVISORY SeRVICeS OFFeReD THROugH BROOKSTONe CAPITAL MANAgeMeNT, LLC, AN SeC RegISTeReDINVeSTMeNT ADVISOR.