The investment strategy that helped you build your savings may not always be the right strategy as you approach retirement. Understanding your risk, how your portfolio is positioned, and whether your investments still align with your goals can help you prepare for the years ahead.
It’s easy to assume your investments match your comfort level with risk, especially if your portfolio has performed well in the past. But as retirement gets closer, understanding how your investments could respond during a market downturn becomes increasingly important.
Your risk tolerance is how much market fluctuation you’re personally comfortable with. Your portfolio risk is the amount of risk actually built into your investments. Those two don’t always line up.
An investment strategy that worked during your peak earning years may not be the best fit as you approach or enter retirement. Taking a closer look at your portfolio can help you determine whether your investments are still aligned with your comfort level, retirement timeline, and overall plan.
Take our risk analysis to get a better understanding of your personal risk tolerance and how it may relate to your investment strategy.
Imagine you’ve always considered yourself a conservative investor. Your portfolio has performed well, and you’ve never had much reason to question how it’s positioned.
Then you’re asked a simple question:
“How much could your portfolio drop before you’d start losing sleep at night?”
The way you invest while building your retirement savings may look different from the way you invest as retirement gets closer. Your timeline, income needs, and comfort with market risk can change, and your investment strategy may need to change with them.
That doesn’t necessarily mean avoiding market risk altogether. It means understanding the risk you’re taking and making sure your investments remain aligned with your personal risk tolerance and where you are in your retirement journey.
Your investment strategy shouldn’t simply be set and forgotten. It should continue to reflect where you are and where you’re going.
As retirement approaches, it can be worth taking another look at the strategy behind your investments.
The goal isn’t simply to ask how your portfolio has performed. It’s to consider whether the amount of risk you’re taking still matches the amount of risk you’re comfortable taking.
