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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 Investment Advisory Services are offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products are offered through LPL Financial or its licensed affiliates. Heartland Planning Associates is a trade name of Heartland Bank. Heartland Bank and Heartland Planning Associates are not a registered broker/dealers and are not affiliated with LPL Financial. The investment products sold through LPL Financial are not insured Heartland Bank deposits and are not FDIC insured. These products are not obligations of Heartland Bank and are not endorsed, recommended or guaranteed by Heartland Bank or any other government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following state: Ohio. Check the background of investment professionals associated with this site on FINRA's BrokerCheck.