Keep it on track

A committed investment strategy is the best reinforcement against even the most unpredictable market conditions (and they’re all unpredictable) to keep your portfolio in good shape over time. An investment strategy takes into account your financial goals, how long you plan to keep assets invested and how well you can stomach the ups and downs of the markets.

Generally speaking, the sooner you’ll need your money, the more conservative you’ll be with your investments, sticking with money market funds, bonds and short-term deposits that deliver a fixed and predictable return. If you have a longer time horizon – such as the 15 to 20 years you have until retirement age – you can be more aggressive with your retirement portfolio to potentially achieve higher returns in the long term. This means holding a greater proportion of stocks and equity mutual funds that aim to build longterm growth.

It’s human nature to feel like you’re missing out when you hear that someone’s portfolio earned 30% last year while you made just 6%. But you can only judge your rate of return in the context of your own investment strategy. Your portfolio may see lower returns in some markets given the nature of the underlying investments, but your money may be much better protected in a market downturn. That’s a pretty fair tradeoff for peace of mind.

Reviewing your strategy

One of the best investments you can make is to review your goals with a financial advisor to assess how you’re doing at this stage of your life and adjust your investment strategy, if necessary. Ask yourself these questions to prepare:

• What is the market value of all my investments today?
• How much money do I save each month for investment purposes?
• What is the average rate of return I expect to generate on my investments over my timeline?
• How much risk am I willing to take in exchange for potentially higher returns?
• What will my investment portfolio be worth at retirement based on my assumptions?