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Walking through the financial maze of stocks, bonds, and mutual funds can be quite a challenge. American Century Investments offers the following tips to give you the know-how for building a profitable portfolio:
Tip 1: Know Your Goals
Consider how much money you’ll need for your children’s education or your retirement. Whatever your vision for the future might be, set your goals and develop a concrete plan for meeting them. This will help guide your investment decisions and ensure that your portfolio aligns with your long-term objectives.
Tip 2: Define Your Investment Time Horizon
Your investment time horizon refers to the length of time you have until you need to access the funds in your portfolio. If you’re not planning on retiring anytime soon, you might want to have a portfolio that includes more long-term investments. On the other hand, if retirement is just around the corner, consider a more conservative approach to protecting your capital.
Tip 3: Determine Your Risk Tolerance
Understanding your risk tolerance is crucial to building a successful portfolio. Figure out how comfortable you are with taking risks and compare that with what you can afford. Generally, the longer you have to invest, the more risk you can afford to take. However, it’s important to strike a balance between risk and potential returns to ensure the stability and growth of your investments.
Tip 4: Consult a Professional
To avoid financial pitfalls and make informed investment decisions, it’s often wise to seek professional guidance when putting together a portfolio. A certified financial planner or investment advisor can provide valuable insights and help you navigate the complexities of the financial markets. “Recent research shows that investors continue to grapple with some of the most basic investment concepts, suggesting a greater need for financial advice and guidance,” said Doug Lockwood, a certified financial planner.
To help investors meet their financial goals, American Century Investments has developed On Plan Investing, a program designed to help investors build and maintain diversified investment portfolios at no additional cost. Combining educational tools, advice, market insight, and investment products, On Plan Investing helps investors develop a personal investment strategy, whether they are new to investing, seeking guidance but still wanting control over their investment mix, need help positioning their portfolios with a long-term perspective, or need help understanding how the markets work.
Frequently Asked Questions (FAQs)
Why is it important to set investment goals?
Setting investment goals helps you define your financial objectives and provides a roadmap for your investment decisions. It ensures that your portfolio aligns with your long-term aspirations and helps you stay focused on achieving them.
How does risk tolerance affect portfolio construction?
Understanding your risk tolerance is crucial to determining the appropriate asset allocation for your portfolio. It helps strike a balance between risk and potential returns, ensuring that your investments align with your comfort level and financial situation.
Why is it important to consult a professional when building a portfolio?
Consulting a professional, such as a certified financial planner or investment advisor, can provide valuable insights and guidance in navigating the complexities of the financial markets. They can help you make informed investment decisions and avoid common pitfalls.
What is on-plan investing?
On-Plan Investing is a program developed by American Century Investments to help investors build and maintain diversified investment portfolios. It combines educational tools, advice, market insight, and investment products to assist investors in developing a personalized investment strategy.
How can on-plan investing benefit investors?
On-Plan Investing provides investors with the resources and support they need to make informed investment decisions. It helps investors stay on track with their financial goals and offers guidance on positioning their portfolios for long-term success.