Identifying Your Financial Retirement Profile

The “ideal product,” then, may be a diversified asset allocation program. By selecting a proportion of assets from each category, you can tailor an overall portfolio retirement to suit your risk tolerance, time frame, and goals. Although there is no guarantee of performance, selecting asset classes based on your personal retirement profile may help insulate you from the worst effects of inflation, market, and interest rate risks, while positioning you for potential account growth.

Select financial retirement profile below that most closely matches you in attitude and time until retirement. The recommended portfolio will provide a starting point for creating your personal blueprint.

Conservative. A conservative investor is usually someone with a short time frame (3 years or less) until retirement and therefore cannot tolerate a great deal of principal volatility. It can also include people with longer time frames who are uncomfortable with the idea of principal volatility. This category of investor wants stability and, typically, income to support retirement. There is also a need for some growth-oriented investments to help fight inflation.

Conservative/Moderate. A conservative/moderate investor may have a minimum 5-year time horizon and can therefore accept more volatility. Safety of principal and income are important, but growth is needed both for inflation protection and to build assets for later years.

Moderate. A moderate investor typically has a time frame of at least 10 years and can withstand modest market volatility. In general, this category of investor can use income-oriented investments for the conservative allocation of a retirement portfolio and this investor looks for growth to build assets over time.

Moderate/Aggressive. A moderate/aggressive investor has both the time (10-plus years) and temperament to withstand more risk in exchange for the prospect of greater returns. This investor typically looks for moderate growth over time but doesn’t ‘’swing for the fence” when choosing investments.

Aggressive. An aggressive investor has a 10-year plus time horizon and the willingness to assume an even higher degree of risk in exchange for potentially higher returns. This individual may be someone just starting out or an experienced investor with a significant base of other assets earmarked for retirement.

Very Aggressive. The very aggressive investor has the time (10-plus years) to assume market risk and expects to withstand significant volatility. He or she will not panic if the portfolio suddenly drops 30% in value, which can happen. This profile typically fits an experienced investor who expects to be compensated for this risk with potentially higher returns, and who understands that such returns are not guaranteed. This investor would typically weight his or her portfolio more heavily in growth and aggressive growth assets.