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I am extremely excited to announce my new e-book,
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October 29, 2006 Setting goals for your portfolio You need to really think about the purpose of your portfolio before searching for your investment options or sitting down with a financial advisor. (Choosing to use an advisor, or going it on your own is a whole different topic.) What do you want out of your portfolio? Do you want dividends, royalties or increasing net worth? In other words are you looking for an income from your investments or are you building your portfolio to prepare for retirement? Or is it a combination of both? To have a dividends re-investing in your account (DRIP – Dividend Re-Investment Plan) builds your worth, but doesn’t give you income. This is really a matter of where you are at in your investment life. Most people who are not retired are looking to increase the value of their account, while retirees are trying to find the plan that gives them income while not depleting the principle of their account. If you are in position where you are trying to get some income, plus build principle, you are in a most complicated place. When you see a stock make a significant gain, you might want to sell to realize the gain in your pocket, rather than on paper. Taking the gain and re-investing the initial investment will give you some spending money, but will not increase the value of your portfolio. BUT, you also need to be aware that the realized gain will also impact your taxes at the end of the year. To some reading this, this may be a no-brainer, but the point needs to be made for the rest of us. Another factor in the portfolio goal question is the risk and return question. Early in life one is usually advised to have a greater portion of one’s portfolio in stocks, rather than low risk-low gain areas such as government bonds. A typical percentage can be found by subtracting your age from 110 to determine the percentage of stocks to low risk investments. An example; if you are 50 you should have 60% in stocks, 40% in low-risk investments such as bonds, certificates of deposit or money market accounts. If you are 40 years old the percentages would be 70-30, etc. All these numbers are merely suggestion, and every person needs to determine their own philosophy. A healthy vibrant person in their 50’s will have a different outlook than someone the same age with health issues. The point to all of this is to think about where you are placing your investments and what you want to get out of them. Hope that gives you something to think about. Solid investing to all Rob
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Want a scholarship into the Millionaire Mind Intensive worth $2590? http://www.secretsofthemillionairemind.com The columns, articles, message board posts and/or any other features provided on Wealth Training Source are provided for personal finance and investment information and are not to be construed as investment advice. Under no circumstances does the information in this content represent a recommendation to buy, sell or hold any security. The views and opinions expressed in an article or column are the author’s own and there is no implied endorsement by Robert Britt of any advice or trading strategy copyright Robert E. Britt 2006 |
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