As we enter 2025, many of us are still trying to finalize our New Year’s resolutions and establish our yearly goals. We may want to cut back on caffeine, (speaking for myself, lose those extra 10 pounds) or spend more time with our families. But some are focused on a lingering financial question: am I getting the investment returns I should be?
Investment returns are a major reason as to why people change advisors, but usually, in my experience, dissatisfied investors may simply feel as though they are missing out on something. Some friends at the golf course talk about their returns, and some people at the hair salon talk about theirs, and suddenly we wonder if we are missing out. I want to offer three key points to consider before making an investment change.
1. What are your goals for your money? Those goals should drive your investment decisions. It is important to talk to your financial advisor and clearly articulate your goals, so a professional can help you accomplish them.
2. What is your risk tolerance? Imagine you are driving down a highway, and a comfortable speed for you is 79. You don’t want to be like one of those slowpokes who hold up traffic and go 68. Now imagine that the way your portfolio is invested is only going at a speed of 68. As you can see, you may not be getting the returns you want simply because your risk tolerance does not match your portfolio risk. The same works the other way as well, as some portfolios are just too aggressive.
3. Are you getting the monthly income you need? If you are getting the monthly income you need from your portfolio, and the returns you are getting are sustaining your accounts, is it really time to make a change to your strategy? Just because your accounts may not be up as much as the S&P 500 does not mean they are underperforming. The most important thing in retirement is getting the income you need from the money you have saved.
Investment strategies should be considered as long term. When we zoom out and look at the whole picture of where our portfolio started and where it is today, it can be shocking to see the growth over time. However, if your goals have changed, or your risk tolerance has changed, or if you are not getting the monthly income you need, you should consider making a change to your investment strategy.
Things change rapidly in this world, so having a professional manage your investments may be in your best interest. You may find you do not need to make many changes at all. The start of a new year, however, marks a good time to assess your financial strategies in light of your goals and risk tolerance. If you are not currently working with a financial advisor, preferably a fiduciary, it may be time to take the next step and begin interviewing different advisors in order to find a financial professional who has your best interest in mind.
Financial Enhancement Group is an SEC Registered Investment Advisor.
