Ep 30 – DIY Financial Planning – Investment Management

Investment management is one of my favorite topics! The second is taxes.

There are 2 big myths about how financial advisors manage a client’s investment that are good practices for you to follow when building your own portfolio:

1. Think like an investor (hold investments for the long term) and not like a trader (hold investments for the short term)
2. Do not create a portfolio of random stocks. Use Exchange Traded Funds (ETFs), or Mutual Funds instead to diversify the investments between equity and fixed income.

How to build your investment portfolio? The easiest way is to get a target date fund. Everything that needs to happen occurs behind the scenes just by owning the fund. It’s a great way to go!

But if you do want to take it up a notch and create a diversified portfolio with equity and fixed income then the first thing you’ll need to know is your risk tolerance to investing.

That’s done by getting a Risk Tolerance Questionnaire. The outcome will be your risk tolerance (High, Medium-High, Medium, etc) and that will correlate to the type of split your portfolio should be at (80% equity/ 20% fixed income, 70/30, 60/40, etc)

If you can’t find a questionnaire, send me an email and I’ll send over what I use with my clients. We’ll go over your results and what type of portfolio it correlates to.

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