There are many different investment strategies that you can use to save for retirement. While target date retirement funds provide an easy do-it-yourself option, financial advisors can help customize retirement plans to account for individual circumstances.
Robo-advisors have also found a middle ground in helping customize portfolios at a lower cost than a human advisor.
If you’re building your own portfolio, the single most important decision to make is choosing the right asset allocation. According to Vanguard, 88% of the volatility that you encounter and the returns that you earn can be traced back to asset allocation. Your experience will be very consistent with other diversified investors with the same asset allocation as you.
As you approach retirement, you will need to convert your investment portfolio into income by either selling assets, investing in income-generating assets, or oftentimes both. When it comes to income-generating assets, you can choose between conventional fixed income investments, dividend paying stocks or MLPs and other structures.
Don’t forget to explore our Portfolio Management channel to learn about different ways to rebalance your portfolio.