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Michael A. Milazzo, CLU, ChFC
Registered Principal
The Meridian Financial Company
3350 Club Villas Dr SE, Unit #1303
Southport, NC 28461
Phone: 631-979-4223
Fax: 910-854-0002
Email: meridian@ae.cadaretgrant.com
Website: www.merfinco.com
September/October 2017
The Benefits of Asset Allocation
One of the most important decisions you can make as a retirement investor is how to allocate your retirement investments among stocks, bonds and cash alternatives. But how do you determine the right asset allocation* for your situation? Start by reviewing the information your plan provides and talking to your financial professional.
Consider the categories
Your retirement plan likely offers funds or portfolios that hold investments in the three main asset classes.
Stocks — Historically, stocks have provided the highest potential long-term returns, but also have the greatest risk of short-term losses.
Bonds — Bonds tend to provide more modest returns than stocks, but they are also less volatile.
Cash alternatives — Considered the least risky of the three main asset classes, cash investments offer the lowest potential returns.
Take a look at time
How long you have to work before you plan to retire may have an impact on how you allocate your assets. Your financial goals and risk tolerance also may determine the investments you choose. Generally, you may be more comfortable with investment risk when you have a longer time frame. And as retirement draws near, you may become less comfortable with investment losses.
Review your account regularly
The asset allocation* you choose today for your plan account may no longer be right for you in a few years. Your risk tolerance may change as you get older. Plus, performance differences can cause your portfolio’s asset allocation to change over time. For example, if stock investments perform well and increase in value, stocks could then represent a larger portion of your portfolio than you had intended. You may need to rebalance your portfolio to restore its original allocation. With your financial professional, regularly review your investments and adjust your asset allocation as needed.
* Asset allocation doesn’t guarantee a profit or protect against losses.
FINRA Reference FR2017-0427-0092/E 08/02/17
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