Guidelines For Helping Investors Set Their Investment Objectives

As investors build their investment portfolio, it is important to maintain a proper allocation to targeted goals for investment types (cash, fixed income, stocks, etc.), depending on the investor’s tolerance for risk. Investment Account Manager includes some guidelines that may help investors with setting their investment objectives.

This information is meant for educational purposes only, and is not intended to be a recommendation. If you have any questions, feel free to post your inquiries on our Facebook page.

Preservation Portfolio: The main goal of this investment objective is to preserve capital. It should be the reference point for investors with a low tolerance for risk. This objective is frequently considered for portfolios with short-term investment time frames. The portfolio asset allocation mix for a preservation portfolio might be: Cash: 10-20%; Bonds: 60-65%; Stocks: 20%-25%

Conservative Growth Portfolio:  The main objective of this portfolio is the desire for a modest level of growth over inflation, while protecting the principal. The asset allocation mix for a conservative growth portfolio might be: Cash: 5-10%; Bonds: 50-55%; Stocks: 35-40%

Balanced Portfolio:  The asset allocation of this investment objective is often split equally between stocks and bonds, with the goal to provide a balance between growth and current income. Longer investment horizon portfolios (generally longer than five years) consider balanced portfolios. The portfolio asset allocation mix for a balanced portfolio might be: Cash: 5-10%; Bonds: 40-45%; Stocks: 45%-50%

Moderate Growth Portfolio:  Here the desire is for growth, but less risk tolerance than for a pure equity portfolio. These portfolios have a higher risk level, so a longer time horizon is required.  Investors with this objective must be able to tolerate the equity market’s fluctuations. The portfolio asset allocation mix for a moderate growth portfolio might be: Cash: 5-10%; Bonds: 20-25%; Stocks: 65-70%

Aggressive Growth Portfolio:  This investment objective is considered by investors with a long term investment horizon, who are able to tolerate several back-to-back years of negative returns. This is the highest risk profile, and therefore may provide the highest return potential. Desire for long term growth outweighs the desire for short term capital preservation. The portfolio asset mix for an aggressive growth portfolio might be: Cash: 0-10%; Bonds: 0-10%; Stocks: 80-100%