The composition of your investments is determined by many factors, including your ability to tolerate the risk of losing money. Every investment portfolio is different because everyone has different goals, time frames and financial circumstances. While you may want to
The composition of your investments is determined by many factors, including your ability to tolerate the risk of losing money.
Every investment portfolio is different because everyone has different goals, time frames and financial circumstances.
While you may want to seek advice from friends and family, you should avoid imitating their investment decisions without considering your unique situation.
Sometimes, to make sure the information you get is objective and focused, it is helpful to seek the guidance of a financial professional who can provide information on the different investment categories and help you determine an investment strategy that closely reflects your goals and circumstances.
Some factors you should consider when choosing how you’ll invest include:
— Your investment objective (whether retirement, children’s education, or other specific goals).
— Your investment time horizon, or how long your money can stay invested before you will need to start withdrawing it.
— Your financial situation or how much you can put aside, how regularly you can do so and the likelihood you will need the money before your objectives are reached.
In addition to these objective criteria, there are also subjective factors: How comfortable are you about your knowledge and ability as an investor, and how much risk can you tolerate?
Basically, there are three general risk-tolerance categories: conservative, moderate or aggressive.
Conservative investors
The conservative investor is usually more comfortable with a portfolio that aims for capital preservation and a low degree of risk. This type of investor is usually most comfortable with investing in fixed income investments that promise to repay the amount invested if held to maturity. Conservative investors generally have a short time horizon, are in or near retirement and are highly averse to risk.
Moderate investors
The moderate investor is generally comfortable with a diversified portfolio that seeks a balance between stocks, bonds and fixed income instruments, and is usually comfortable with accepting a moderate degree of risk in exchange for potentially higher returns.
Moderate investors tend to avoid risks inherent in international investments and seek to preserve and grow capital.
Aggressive investors
The aggressive investor is generally comfortable with a portfolio that focuses on maximum growth and can tolerate the risk associated with investing heavily in equities, including international equities, in exchange for potentially greater returns.
This approach is best suited to individuals with a substantial time horizon (ten years or more), who are willing to risk short-term losses in order to benefit from the equity markets’ potential longterm historical growth.
Investments are subject to market risk, will fluctuate and may lose value. International securities carry additional risks, including currency exchange fluctuation and different government regulations, economic conditions or accounting standards.
For more information, or to help you determine the type of investment strategy most appropriate for you, contact your financial advisor.
AXA Advisors does not provide legal or tax advice. Please consult your tax or legal advisor regarding you individual situation.
• Troy Wada offers securities through AXA Advisors, LLC (member FINRA, SIPC) 1003 Bishop Street, Suite 1450, Honolulu, HI 96813, and offers annuity and insurance products through an insurance brokerage affiliate, AXA Network, LLC and its subsidiaries. He may be reached on Kaua‘i at 241-7701 or at troy.wada@axa-advisors.com.
