 Whether we realize it or not, our lives are often structured in an incredibly “goal oriented” way. At work, we push ourselves: to reach the next promotion, pay raise, or a new and exciting level in our business. At home, we have financial goals: building an emergency fund, padding our retirement savings nest egg, and sticking to a budget. We also have goals throughout our personal lives: we want to get married, have kids, enjoy time with family, take our dream vacation, celebrate our grandkids, and maintain a positive relationship with our spouse or partner. Even if we’re good at living in the moment, most of us are working toward something almost every moment of our lives. That’s a good thing! That kind of drive is what pushes us to be our best selves, and results in long, fulfilling lives. Unfortunately, during retirement, a lot of those traditional goals that have guided us until now fall by the wayside. We’re left with laid-back days and endless downtime. While this may sound like the dream, it can cause some pretty serious cognitive dissonance. So much so that many retirees start thinking: Well, what now? The Shift to Retirement: Setting New Goals Defining your retirement lifestyle is key, and it should be done before you enter retirement. Sitting down and mapping out what you want to do during the day-to-day and some bigger, more meaningful retirement goals can help to set new goal posts as you make this lifestyle transition. It’s often easiest to start with your “bigger” goals during retirement. A few examples I’ve seen from clients and other new retirees are: Traveling to Europe Spending 6 months on a newly-purchased boat Taking a dream trip to a famous, exclusive golf course Bringing your entire family (grandkids and all) on a once-in-a-lifetime cruise Selling your house in the suburbs to move to a smaller home in the country/mountains/by the beach, surrounded by nature and the things you love Remodel your home with a big bunk bedroom and a pool for the grandkids Start a business (or invest in a family member’s business that you’ve always been passionate about supporting) Go back to school These goals are larger than life. They’re the things you’ve always pictured your retired-self doing by the time you retire. It’s important to have these big goals because they give you something to look forward to and work toward. However, what we often fail to account for are the smaller goals that keep us motivated each day. A trip to Europe or a huge home remodel project may be a big part of your life during retirement, but they’re not going to take up space every single morning when you wake up and don’t have your usual routine and work schedule to stick to. That’s why I also encourage retirees to focus on smaller, bite-sized goals, as well. These goals aren’t intended to help you achieve life-changing experiences, but they do help you to live your days as a retiree in an exciting, fulfilling way. A few examples I love are: Going to the gym for a minimum of 30 minutes a day Learning a new hobby like painting, pottery, or yoga Taking a class on a topic that interests you at a local community college Hosting a potluck dinner with friends one night a week Taking your spouse or partner out on a date once a week Trying a handful of new recipes a month These goals might not seem very exciting at first glance, but they’ll keep you motivated to get out of bed and move forward with confidence and purpose each day. Feeling Stuck? You’re not alone. Many retirees struggle with goal setting, and that’s because it’s not easy to transition from a life of pre-determined career and personal goals to one where you’re no longer saving toward anything, you don’t have a career ladder to climb, and many of your personal goals have been checked off the metaphorical to do list. This is where working with a financial planner who helps you think through both the dollars and cents of your retirement as well as your lifestyle can be incredibly helpful.
Want to learn more? Schedule a call today! Tony Velasquez runs Wisely Advised, LLC a full-service Registered Investment Advisory Firm offering Financial Planning, Accounting and Investment Advisory services to individuals, families, and businesses. Whether it's traveling, being at the beach, or at his family's ranch in Texas, Tony loves enjoying time with his family and friends.
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 Many people have heard that a balanced portfolio is a key to investing success. But very few people actually know what it means to have a “balanced” portfolio - let alone what rebalancing looks like. One way to ensure a balanced portfolio is to look at your asset allocation.
What is Asset Allocation?Asset allocation is the process of divvying up your investment portfolio across multiple asset categories. Typically, this means you’re invested in several of the following:
What types of assets your portfolio contains will largely depend on your time horizon (or how long you have until you’ll need the funds from your investments to make a large purchase or to retire), and your risk tolerance. There’s no “perfect” formula for asset allocation - it’s different for every individual investor and their unique financial goals and needs. However, most people will organize their asset allocation based on their retirement timeline. In general, the further away from retirement you are, the more likely it is that you can take on “riskier” investments. As you get closer to retirement, you rebalance your portfolio to avoid risk, as you’ll need those funds sooner rather than later. How Do You Rebalance?Finding the “right” balance in your portfolio is no easy task. Truth be told, there likely isn’t one ideal allocation formula for your assets. The way you’ve allocated your assets is going to change over time as your risk tolerance and investment timeline shifts. This is where rebalancing your portfolio can come in handy. No investment strategy is ever set in stone. Rebalancing your portfolio periodically can help you to ensure that no one asset class is notably outweighing another. As your portfolio evolves, your investments are going to grow at different rates. Before long, you may have over-weighted asset categories taking up a lot of space in your portfolio, which could put you at unnecessary risk. When you rebalance, you’re looking to accomplish a few things:
To rebalance your portfolio, you follow three easy steps:
Keep in mind that your “ideal” asset allocation is based both on your timeline (i.e. how long until you have to retire, or how long until you’ll need the funds from your investments), and how much risk you can emotionally take on. If you’re finding that taking on “riskier” investments is making you sick to your stomach and that you’re constantly having to remind yourself to avoid making a rushed decision based on a market correction, you might be better suited to a more conservative asset allocation - even if you have many years before you need the money from your portfolio for retirement. And that’s okay! Arranging your portfolio in a way that won’t drive you crazy is just as important as lining up your investment timelines. How Often Should You Rebalance?Rebalancing your portfolio should be an annual to do - don’t try to do it more often than that! Unless you need your investments in a very short period of time and are watching the market like a hawk before you start to withdraw, you shouldn’t be constantly adjusting your asset allocation. If you are, you’re less likely to reap the benefits of long-term investing strategies. Don’t DIYAsset allocation is incredibly important as you move toward retirement. If you let your assets go unbalanced for too long, they could end up hurting your portfolio, and sending you off-course and away from your financial goals. If you balance them too often because you’re worried about “timing” the market, you could have an equally adverse effect on your portfolio’s potential growth. Your best bet is going to be working with a financial planner who can help you automate your portfolio rebalancing and keep you on track to meet your retirement goals. Want to learn more? Schedule your consultation with Wisely Advised today! Tony Velasquez runs Wisely Advised, LLC a full-service Registered Investment Advisory Firm offering Financial Planning, Accounting and Investment Advisory services to individuals, families, and businesses. Whether it's traveling, being at the beach, or at his family's ranch in Texas, Tony loves enjoying time with his family and friends. |
MEET TONY
Tony Velasquez runs Wisely Advised, LLC a full-service Registered Investment Advisory Firm offering comprehensive financial planning and investment advisory services to individuals, families, and businesses.
Whether it's traveling, being at the beach, or at his family's ranch in Texas, Tony loves enjoying time with his family and friends. Archives
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