October 5, 2012

How Balanced is Your Retirement Portfolio?

This is a guest post from Jenna Smith who is an online blogger who normally writes on the topics of personal finance and business. Jenna often writes on family finance and investment, including the role of investment services like Cavalry Portfolio Services. You can read more writing by Jenna at paidtwice.com

There is nothing more important than planning for retirement. Whether you are in your 20s or in your 40s, it is always the right time to start thinking about how you will support yourself in the retirement years. It is essential for you to think about the way in which you will distribute funds in a Roth IRA or 401(k) account. As you devise your portfolio strategy, here are some tips to consider.

1. If you're young, choose high-growth stocks.

If you are young, then you have time on your side. Think about choosing some stocks that are considered a riskier investment. This does not mean that you should not look into the actual value of the company as well as its debt-ratio. You should still make sure that you are investing in companies that have high value. Just know that you can afford to invest in pharmaceutical, "green" or tech companies. These types of companies are set for high growth in the upcoming decades.

2. If you're older, choose conservative stocks.

If you are in your mid 40s or older, then you should choose conservative stocks for your portfolio. Stay away from stocks that have a high risk. You need to have access to funds during your retirement years, so this should be your main goal. You do not have time to waste in losing funds from your portfolio.

3. Give mutual funds a chance.

Mutual funds can provide you with a great opportunity for growing your portfolio in a safe way. Try to find a mutual fund that has consistently performed in the past five or ten years.

4. Stay away from penny stocks.

Penny stocks are a great trap for people of all ages. Older individuals get lured into the idea of making "fast cash" with penny stocks. Younger people believe that they can keep their money in penny stocks for years and experience growth. The truth is that a majority of companies with penny stocks are going through bankruptcy. You should try to avoid investing in these companies.

5. Research the debt-ratio of a company before investing.

Lastly, always make sure to research the debt-ratio of a company before you put your money into the company. If a company has many outstanding debts, then it may be at risk for filing for bankruptcy.
When you invest, it is essential to keep these tips in mind. You will be able to create a solid portfolio by just remembering to consider your own circumstances. Another tips would be to meet with an investment service. You don't necessarily need to pay someone to advise you on everything, but getting some professional advice might be wise decision.

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