Tips and resources that everyone can use

Owning stock funds for the long haul

tips for retirement planning

If you are 50 or older, you may question whether you need to continue buying stocks in your portfolio. After all, stocks are risky, as we saw with steep losses in 2008 and 2009. But increased life expectancies and rising inflation are two important considerations that tilt the argument for stocks. The important questions for pre-retirees to answer are balance (how much to invest in stock funds, given your time horizon and risk appetite) and cash flow (how much money you need to live on once you retire).


How can I tie my investing strategy to specific financial goals?
Goals-based investing is an investment methodology that is less focused on investment performance and more connected to meeting your personal or lifestyle goals. Whether saving for retirement, buying a vacation home, or building a legacy for the family, the methodology matches a specific strategy to each goal. Rather than have one savings “bucket” to address all spending needs, separate portfolios typically are created.

Quarterly Reminder

Time for a tuneup
If you haven’t taken a look at your portfolio allocation in a while, year-end is a good time. Your needs for investment growth and/or income will change over time, as will your tolerance for risk. You should compare your current portfolio against your liquidity and income needs, risk tolerance and time frame. Make sure your allocation is aligned with those needs, and make adjustments to your asset mix if you sense it’s out of balance.

Tools and Techniques

Measuring your investment comfort level
Your appetite for risk does not stay the same, nor does it likely move in a straight line in response to evolving personal circumstances, or changing economic and market conditions. Use this quick online questionnaire to help measure your current level of risk tolerance and determine how it might affect your investment portfolio’s
current allocation:

Corner on the Market: Basic Financial Terms to Know

P/E Ratio
The price-to-earnings (P/E) ratio is a common, back-of-the-envelope way to measure and compare the value of one stock against another, or to an index. Specifically, it measures the current price of a share of stock against its per-share earnings. For example, suppose a company’s share price is $40, and its earnings over the last 12 months were $2 per share. The P/E ratio for this stock could be easily calculated as 40/2, or 20. The P/E ratio indicates the dollar amount an investor could expect to pay to receive one dollar of that company’s earnings. In this example, the investor would pay $20 for $1 of the company’s earnings.

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Disclosure: This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. LPL Financial and its advisors are providing educational services only and are not able to provide participants with investment advice specific to their particular needs. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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© 2016 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this newsletter are those of Kmotion. The articles and opinions are for general information only and are not intended to provide specific advice or recommendations for any individual. Nothing in this publication shall be construed as providing investment counseling or directing employees to participate in any investment program in any way. Please consult your financial advisor or other appropriate professional for further assistance with regard to your individual situation.

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