Investment Planning by the Decade

Whether the market rises or falls, you need to stay the course and invest throughout your lifetime

Freeman suggested she invest in mutual funds and exchange traded funds (ETFs), including the WisdomTree LargeCap Dividend Fund (DLN) and PowerShares (PRFZ), to give her a diversified portfolio of small- and mid-cap investments. Small-cap investments are generally in companies whose total shareholder value is less than $1 billion and, while risky, are purchased due to their upside potential. Mid-cap investments are in companies whose value is usually greater than $1 billion, but less than $5 billion. These offer less of the upside potential, but come with less of the downside risk. ETFs (funds that trade like stocks) are attractive to clients for several reasons, says Freeman. “They have lower expense ratios [costs] than mutual funds, diversify a portfolio in a single transaction format, and offer lower taxes, no investment minimum, and increased trade flexibility.”
Freeman also suggested Hawkes purchase individual stocks such as Apple Inc. (AAPL), of which she bought five shares at $99 each in 2009. As of earlier this year Apple was trading at around $533.

“She bought Apple low when [others] were fearful,” says Freeman, noting Apple was undervalued at the time. “When everyone else thought the world was ending in 2009, she was comfortable enough and educated enough about the process that she went into the market.”

Everyone needs an investment plan, which is what determines your portfolio’s asset allocation mix and type of investments (see sample asset allocation tables). An investment plan should include considerations such as one’s time horizon before retiring, risk tolerance, and tax considerations. So, whether you’re in your 20s, 30s, 40s, 50s, or 60s, here are some winning strategies to help you sail through economic storms into sound retirements.

20 Somethings
As those in their 20s begin their professional careers, it is the best time to get their financial lives on track. To do that, they should:

  • Invest in a 401(k) through their employer
  • Map out their goals with the assistance
  • of a financial planner
  • Start the homeownership process
  • Build solid credit and saving for retirement

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