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How to Build a Well-Balanced Retirement Portfolio

by Wendy Stokes January 22, 2019
by Wendy Stokes January 22, 2019

Far too many people don’t take their retirement savings and investing seriously. Retirement is your chance to finally calm down and enjoy the fruits of your labor. Building a retirement portfolio should be simple. In order to ensure success, you must take steps to create an optimal retirement portfolio early. If you set it up correctly, you can reap the benefits for years to come… completely on auto-pilot.

There are a number of different vehicles that you can use to start saving for retirement and take advantage of the various retirement benefits associated with these accounts. These are the most commonly known retirement accounts:

401(k): Usually offered by your employer

Roth IRA and IRA: An Individual Retirement Account (IRA) is a tax-advantaged account that is will help you save for retirement. There are two different types of IRAs: Traditional and Roth IRAs. These accounts are usually opened on your own discretion.

Health savings account: This is usually offered along with your health plan. You can use this to invest tax-advantaged.

Source: The Balance

SEP IRA: SEP mean simplified employee pension. This is an account that is primarily used by the self-employed or small business owners.

Regardless of the account type, there are a number of different ways you can save effectively and efficiently. Here are the steps that I take to ensure that I’m saving for retirement and reaching my goals.

Contents

Steps to Create an Optimal Retirement Portfolio

As a financial planner and professional investor, here are the steps that I take to ensure my portfolio is properly balanced, diversified and optimized.

1. Make Your Funding Automatic

One of the most important steps in saving for retirement is creating an automated transfer from your checking account to your various retirement accounts. Right when I got my first corporate job, I started to contribute the maximum amount allowed to my retirement accounts, including my 401(k) and Roth IRA.

I did this connecting an automated transfer from checking to the retirement account by hooking up my routing number. This will allow you to enjoy the better things in life and not waste time manually transferring money.

2. Invest in Low-Cost Index Funds

This is where the Keep It Simple Stupid (KISS) approach kicks in. There’s no reason for you to pay more for an investment fund when you can get the same job done for half the price. Opt for low-cost index funds that track the most important indexes, which would include the S&P 500 or the Dow Jones Industrial Index.

Source: Vanguard Global Sites

By investing in index funds, you are already fully diversified across industry types of public companies. Plus, indices rebalance over time. Thus, you will always be diversified. No need for picking stocks on your own.

3. Consider a Low-Cost Robo-Advisor

Thanks to artificial intelligence and technological advancements, you can have a computer make investment decisions for you. These computers will automatically trigger your rebalancing when volatility strikes in the stock market. You should consider using these robo-advisors for your after-tax accounts. This will ensure that you will

4. Get Outside Consultation Once in Awhile

I’m a huge advocate for getting outside consultation once a year. I don’t believe it’s worth paying a significant sum of money for advice. An annual checkup should do the trick. A free consultation will give you access to your forecasting and how you are achieving your goals for retirement. It’s good to get constructive advice once in a while.
Consider using online money management software to help with your portfolio forecasting and tracking.

Source: Mergers & Inquisitions

Conclusion on Creating a Well-Balanced Portfolio

Building a retirement portfolio needs to simple and straightforward. If you complicate things too much, you’ll end up spending too much money and having a sub-optimal portfolio. Focus on automation. This can make your life a whole lot easier. Now, go out and enjoy life. You’ll be retired before you know it.

professional investorretirement portfolioWell-Balanced PortfolioWell-Balanced Retirement Portfolio
Wendy Stokes

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