Financial Planning, Investment Solutions & Retirement Plan Solutions
A Simple Way to View Your Investments
Published by Pat Sweeny on
Sep 21, 2021 3:05:42 PM
The advisors here at Apella all share the same core investment principles and a belief in the importance of financial planning. They have the ability to take into account your unique lifestyle considerations, investment preferences, and goals. Our investment committee conducts the research and due diligence vitally important to ensure a successful investment experience but our advisors have the ability to customize your portfolio and financial plan.
With that said, this piece is designed to help you mentally organize your savings to give you confidence in your objectives. Investing and planning can get complex as the size of our assets and families grow through the years. Try looking at your situation through this lens.
There are three “buckets” of money:
Cash – this bucket carries no risk; low returns; easy access to your money (liquidity); is to be used for short term obligations (within the next couple of years and sooner) and emergencies. The amount in this bucket should be arrived at with your advisor via the planning process.
Investment – this bucket holds investments for obligations more than five years out, most notably retirement. But it also includes college funding, a vacation home, long-term care (depending on your current age), legacy money for kids, grandkids, charity, etc. This is the lion’s share of most investor’s savings and thus should be broadly diversified, periodically rebalanced and reviewed regularly.
Speculative – this bucket is for a small percentage of your investment portfolio that you are willing to put at risk for the potential for greater gains. For many, that means 0% as they are very risk averse. If you are comfortable with risk and volatility, consider up to 10% of your investment bucket here. If you wish to invest in a speculative investment, you must be mentally prepared to lose all this money.
Of course, the planning process takes into account many other facets of your net worth such as real estate, risk management, collectibles, etc. But this three bucket approach is a good way for you to think about your savings. You should be comfortable with what percentage of your money sits in each bucket and why. Knowing the big picture doesn’t have to be super complicated.
Apella Capital, LLC, provides this communication on this site as a matter of general information. Information contained herein, including data or statistics quoted, are from sources believed to be reliable but cannot be guaranteed or warranted. Nothing on this site represents a recommendation of any particular security, strategy, or investment product. The opinions of the author are subject to change without notice. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. All content on this site is for educational purposes and should not be considered investment advice or an offer of any security for sale. Please be advised that Apella Capital does not provide tax or legal advice and nothing either stated or implied here on this site should be inferred as providing such advice. Apella does not approve or endorse any third party communications on this site and will not be liable for any such posts.
Diversification seeks to reduce volatility by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market.