Planning for Retirement should come Years in Advance
A lot of people don't realize that planning for retirement should come years in advance.
When you retire, you'll be faced with selling some of your investments to begin to fund your retirement. Many people are tempted to only look at the Asset Classes with the highest returns (such as the latest hot stock), but what happens if your investments are down just when you are looking to retire? Just ask the people that were planning on retiring during the 2008 market crash!
This is where having a diversified portfolio of different Asset Classes kicks in.
ADVANTAGE OF MULTIPLE ASSET CLASSES
Having several Asset Classes (Stocks, Bonds, Real Estate, Real Return Bonds, Commodities, etc.) helps stabilize your portfolio. Different Asset Classes tend to have low correlation to one another (when one goes down, the others don't necessarily all go down). When it comes time to sell, you now have more options.
Let's say you own Stocks through a Mutual Fund on the TSX Stock Market. You also hold a Rental Property. Statistics show that a large downswing in the stock market has very little to do with a movement in the Real Estate Market. By having some investments in both asset classes, you now have more options (like choosing to sell the Real Estate property and wait for an uptick in the stock market).
About Richer Journey, Inc.
At Richer Journey's we work with you to translate your financial goals into reality. We work with you to create a structured plan, educate you on investment options and teach you practical negotiation skills. All our tips are focused on increasing your returns. We do not sell products or offer to manage your money… our focus is solid education.