Investing with the goal of a nice retirement nest egg in mind, you’re now able to use new trading technologies and financial instruments, such as exchange traded funds (ETFs), to help maximize the potential of your portfolio.
In years past, the general portfolio ratio held roughly a 60/40 or 70/30 bond-to-stock ratio, with the allocation to bonds increasing as you reach your Golden Years, writes Jennifer Leigh Parker for USA Today. In today’s world, more investment advisors are urging long-term investors to consider allocating some cash into real estate and commodities. [Why 401(k)s and ETFs Can Work Together.]
Anthony Roth, head of Wealth Planning at UBS Wealth Management Americas, comments that investors “should only rebalance when a certain portion of portfolio gets too large. If you’re in a strongly directional market you may have to rebalance three or four times a year.”
Diversification is also key, and it can be achieved by investing in different sectors and asset classes. The main goal is to have investments that are uncorrelated with one another, which helps reduce overall risk. Additionally, adding an international component is also becoming more of a norm these days.
ETFs are a great tool for investing into retirement. Unlike mutual funds, you generally don’t have to pay high manager fees. Advisors also suggest moving into investments using a “dollar-cost averaging” strategy where an investor would incrementally move cash into an investment rather than betting it all at once. This can be easily done these days, thanks to low- or no-commission structures at various brokerages. [ETFs and Retirement Go Hand-in-Hand.]
For more information on saving for retirement, visit our retirement category.
Max Chen contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.