Investors should be a central part of the investment process; when they collaborate well with their advisor, the process tends to go smoother. Managing your portfolio requires more than picking the next big stock idea. Focus on risk management, organize your estate, and be practical about your investments. 

Whether you work with a professional financial planner or are a savvy, independent investor, consider these strategies to work toward a successful financial future.

Set proper expectations

Since the stock market is often compared to a roller coaster ride, consider this metaphor in conversations with your investment professional. Choose a “ride” that gives you just enough thrill and excitement but won’t make you sick and want to leave the amusement park. Work together to pursue an investment strategy that will accomplish your goals and then take no more risk than necessary.

Be ready for your risk tolerance to change as you advance through phases of your life. You may not want to ride the triple-loop-de-loop coaster you once enjoyed when you were younger. From age 60-70, we see clients’ risk tolerances change dramatically, from moderate growth in the final working years, shifting to a balanced strategy at retirement, and finally toward preservation at 70 and beyond.

Remember that a traditional 65-year-old retiree still has a 20-year expected life span, so don’t get too conservative as you head into retirement. Work with your advisor to make proper adjustments so that your portfolio is appropriately allocated at each life stage. 

Plan for the future

Make sure you have a will, formalize health care directives, and update powers of attorney. Regard these as your “treasure map” that you will leave for your family. You’ve worked hard and saved a lot, and you want your loved ones to benefit someday, but they must be able to find, consolidate, and inherit your assets efficiently. Organize these and other documents like life insurance and long-term care policy statements in a secure place that a loved one knows about (lock box, safety deposit box, etc.).

It could be beneficial to consult with a professional to determine if your idea of an estate plan matches what will actually happen at your death, particularly for those in a second marriage. Align your wishes and legal documents by placing primary and contingent beneficiaries on every possible account — ask your advisors about payable on death registrations at your bank and transfer on death registrations for your taxable brokerage accounts. Your retirement accounts and annuities require beneficiary designations, but check and make sure they are up to date.

Diversify your investments

It’s important to keep some money set aside for emergency purposes. To do this, consider utilizing savings and money market accounts at your bank or credit union. Your advisory team will help you understand how to apply asset allocation and diversification to customize your investment strategy. 

Asset allocation is one of the most basic components of investing and is determined by how much you have committed to stocks, bonds, and cash. The more stocks you have, the higher return you should expect, and the higher risk you are willing to accept. Diversification is a required step to make sure you don’t have all your financial eggs in one basket. Combining asset allocation with diversification can help lessen the volatility in your portfolio and increase your chances of reaching your investment goals.

Diversification could include buying large and small cap stocks, government and corporate bonds. Consider using stop-losses; some of the most iconic companies have disappeared from today’s landscape, so don’t get attached to investments and hold on to falling securities forever. It’s important to use some products with a guarantee, especially for a portion of your lifetime retirement income. 

Determine your goals, take no more risk than necessary, design your treasure map, be patient, and use diverse income strategies that include some guarantees. This may sound like a massive undertaking, but working alongside a seasoned financial professional can help you prepare for a retirement you can be proud of!

This content was brought to you by Impact PartnersVoice. Rodger Anthony McAlister is a registered representative of and offers securities through Money Concepts Capital Corp, member FINRA/SIPC. Investment advisory services offered through Money Concepts Advisory Service, a registered investment adviser. Insurance products and annuities offered through Rodger A McAlister, KY insurance license #372751. DT993796-1020