How to Create a Well-Rounded Financial Portfolio

Creating a well-rounded financial portfolio is an important step in creating a financially secure future for you and your family. Today’s post explores considerations to crafting a well-rounded, diverse financial portfolio.

Know Thy Self
Investments are largely personal. As an investor it’s important to know where you stand on certain issues like risk and reward, and what your financial goals are. Having these topics determined will help your financial advisor create a personalized portfolio plan that’s specific to you. Contrary to what some might think, it’s not advised to simply pass one person’s portfolio strategy to another. Each person is unique in their goals and current financial state. The first step in creating a well-rounded financial portfolio is to define your asset allocation.

Important considerations will be your timetable i.e. age, how much time you have to let investments grow, initial investment amounts, and future financial needs. How risk averse are you? Are you willing to risk greater losses for greater returns? Or, would you prefer smaller losses and smaller returns? Taking these personal preferences into account will largely shape how your IMAFS financial advisor suggests allocating your assets. As a general rule: the more aggressive/riskier a plan is the more equities and the less bonds will be contained. For more conservative and less risk averse plans, there will be more bonds and less equities.

Diversification
Diversification is a tool used to mitigate risk by spreading investments across a wide variety of asset allocations. The idea follows the logic of the simple phrasing, “don’t put all your eggs in one basket.” Diversification is one of the most important steps in creating a well-rounded financial portfolio. The underlying rationale is that spreading out investments may lower portfolio risk while yielding a higher rate of return.

Portfolio Weightings
Lastly, it’s important to consider the portfolio weightings in your strategy. Your risk tolerance and timetable should be the primary drivers behind your portfolio allocation. When you begin creating a portfolio you may want 60% equities and stocks and 40% bonds. As your investments yield returns, you may find that certain avenues are performing better than others or are less risky than others and you may want to reallocate the weightings of your investments at that time. 

Regardless of returns, it’s always advised to evaluate your portfolio weightings every six months to a year to ensure your current goals are properly reflected in the distribution. If your financial goals change you may need to rebalance your accounts.

At Idaho Medical Association Financial Services (IMAFS), we specialize in offering financial guidance and portfolio management for those in the medical profession. We understand your specific career needs and requirements and we’re able to offer well-founded financial portfolio strategies personalized to your needs. For more information, call (208) 336-9066 or email jared@imafs.org. We look forward to continuing to assist you on your financial journey.

Idaho Medical Association Financial Services is a financial and wealth management firm specializing in personalized financial guidance to accredited investors in the medical field. Areas of speciality range from investment planning and retirement analysis to in-depth services such as tax analysis and strategies, insurance and estate planning and financial planning. For a free financial consultation, please call: (208) 336-9066 or email jared@imafs.org.