This year’s stock market roller-coaster ride should have everyone reviewing their long-term financial plan whether or not they invest in stocks.
It’s always difficult deciding where to put long-term money that you hope will grow into a healthy retirement fund. Start by asking yourself the following questions to get a perspective of what kind of investor you are.
The International Association for Financial Planning suggests that you be honest as you review the following:
Conservative or low-risk investor
- I don’t want to risk any of my principal.
- I want to receive a guaranteed rate of interest on my investment.
- I am near retirement (less than 10 years.)
Moderate or medium-risk investor
- I can live with some ups and downs in an investment.
- I would like to have a combination of high- and low-risk investments.
- I have some time for my money to grow.
Aggressive or high-risk investor
- I have an iron stomach and can handle market swings.
- I want the highest possible long-term rate of return, even if I risk losing some of my principal.
- I have at least 10 to 15 years for my investments to grow.
Whatever your investment philosophy, never invest in a product that you don’t understand. And review your investment strategy annually, especially as you approach retirement. Also a life change like a marriage, child, divorce or business adjustment may have shifted your risk comfort level.