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When you are within five years of retirement, you need to take a hard look at your investment strategy. Yes, it is time to get more conservative, but one of the biggest mistakes you can make is being too conservative.
You still have many years left in retirement, so your portfolio must keep pace with inflation. If your portfolio is too conservative, you will expose yourself to inflation risk. You'll need some growth-oriented investments in your portfolio to counter inflation, in addition to income-producing investments. As a result, your focus will now be shifting from primarily growth investments to investments that generate both growth and income.
Your goal is also to have less volatility in your portfolio. Meeting the goals of growth and income and less volatility may require that you gradually reposition your current holdings.
IMPORTANT NOTE: In addition to your investment holdings, you should establish an emergency fund of approximately three to six months of living expenses.
IMPORTANT NOTE: If you are within five years of retirement, you may need to adopt a temporary investing strategy for your qualified plan assets. See the section Basic Investing Strategies.
One of the goals of your investment strategy will be to generate monthly income. It will be helpful to establish specific retirement investment goals, and to actively manage your retirement investments. You should also evaluate the impact of capital gains tax rates on your investments.
Securities and advisory services are offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Heartland Bank and Heartland Planning Associates are not registered as a broker-dealer or investment advisor. Registered representatives of LPL offer products and services using Heartland Planning Associates, and may also be employees of Heartland Bank. These products and services are being offered through LPL or its affiliates, which are separate entities from, and not affiliates of, Heartland Bank and Heartland Planning Associates. Securities and insurance offered through LPL or its affiliates are:
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