The term “diversifying your retirement portfolio” is commonly heard when discussing retirement, but what does it really mean? Here’s why diversifying your retirement portfolio matters and how you can do it.
Why does it matter?
Creating a diverse portfolio means having a number of investments allocated in different ways and in different amounts. Basically, diversifying makes sure your money isn’t all in one place. This way if one investment does drop, it won’t leave you as hurt as it would if all of your savings was invested in it. Diversifying fosters a lower risk while still receiving some reward.
Before you diversify
As you near your retirement, it’s important to know how much you’ll need after you retire. This way you can accurately prepare your portfolio based on those needs. One way to help your retirement portfolio expand is to add more money into it. This can be done by saving a little bit more each month in the years leading to your retirement. Diversifying can be done by anyone, near or far from retirement, but it is an extremely valuable move for those close to retirement.
Diversifying Your Retirement Portfolio
If you are getting close to retirement, you probably won’t want to have all of your investments in the stock market. The possible downs in the market may be too damaging to come back from before you retire. Generally, the further from retirement you are, the more risky you can be with investments. As you close in on retirement, you will want to guard your principal and allocate your investments in a low-risk manner. It’s good to start investing in dividend-paying stocks, high-quality bonds or short-term treasury bills. These options can provide a return but without huge dips like the stock market.
There’s no exact number of investments you need to make your portfolio more diverse. But the more invested in more places, lowers your risk of extreme damage to your funds. The best way to get started is to consult with a financial architect at Miramontes Capital. We can help you plan out your portfolio so you can diversify with confidence.
FOR MORE INFORMATION REGARDING DIVERSIFYING YOUR PORTFOLIO CONTACT MIRAMONTES CAPITAL.
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Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.