Accumulation planning addresses an individual’s investment needs, asset allocation, and the suitability of different types of securities in light of your goals and risk tolerance.
In today’s world, there are common needs and desires people seek to accomplish. To protect their ability to earn and accumulate wealth, many people choose to hold insurance, as well as maintain an emergency fund, to guard against depleting savings that are intended for other goals.
Asset allocation
Asset allocation is used to distribute your investable assets among a variety of investment categories.
This process aims to:
- Reduce overall investment risk
- Create more reliable investment forecasts
- Improve the risk/return tradeoff of your portfolio
Accumulation planning also involves the choice of securities for your investment portfolio. Basic securities are stocks, bonds, and mutual funds. Separately managed accounts, option strategies, short-term assets, and annuities are also used to help optimize your portfolio.
Alternative Investments
Alternative investments may also be an option for the right investor. One of the premier benefits of alternative investments is diversification, resulting from the inclusion of investments that tend to react differently to the markets than more traditional investments. Managed futures, hedge funds, oil and gas, tax shelters, and real estate are all examples of alternative investments. These products generally involve substantial risk and limited liquidity.
Some situations require different expertise than typical stock and bond portfolio implementation. These situations usually pertain to employer-related retirement plans and stock options, margin strategies, and real estate exchanges.
Most investors understand that as risk increases, the potential for return also increases. But there is a point for every individual where the level of risk is not worth the potential return. The goal of asset allocation is to provide you with the risk/return scenario that is most comfortable for you.
Alternative Investments involve substantial risks that may be greater than those associated with traditional investments and may be offered only to clients who meet specific suitability requirements, including minimum net worth tests. These risks include but are not limited to: limited or no liquidity, tax considerations, incentive fee structures, potentially speculative investment strategies, and different regulatory and reporting requirements. There is no assurance that any investment will meet its investment objectives or that substantial losses will be avoided.
Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.