Spring 2010 issue of Horizons

For Your Money

1. Identify your goals and objectives — You cannot build an appropriate portfolio without having a good understanding of your goals and objectives. Remember, assets are a means to an end. Ask yourself the following questions: • When do I plan on withdrawing from this portfolio to fund my retirement lifestyle? • How much will I need to withdraw annually? • How long do I plan on withdrawing from this portfolio? • Will there be any large, non-recurring withdrawals from this portfolio before I retire? • Do I want to leave a legacy to my heirs or charities? If so, how much? You may want different portfolios for different objectives. For example, a portfolio designed to provide for the payment of a wedding in five years will be different than a portfolio providing for your retirement in 20 or 30 years. 2. Understand your risk tolerance — It is essential to have a good understanding of your risk tolerance. From our experience, most investors overestimate their tolerance for risk. Investing in a portfolio that is too aggressive may cause your emotions to take control when the market is volatile, resulting in getting out

Managing Your Assets in Uncertain Times If the stock market’s volatility over the last 10 years has reinforced anything, it is that it is impossible to predict what the next 10 years will bring. One of the most important principles of investing is acknowledging that it is impossible to consistently time the market or predict the future. So, looking forward 10 years and beyond, what can we do to ensure we make sound investment decisions? By Mike Ferman, CPA, and Tom Tesar, CPA, CFP

when prices are low and not getting back in until the volatility subsides and prices are higher.

3. Build a diversified portfolio designed to meet, not necessarily exceed, your goals and objectives — Your portfolio should be diversified both across and within asset classes. Different

asset classes fall in and out of favor at different times of the business cycle.

Appropriately diversifying among all of the asset classes and sub-asset classes should provide you a greater consistency of returns at a risk level

7 u spring 2010 issue