Make sure your investments match your goals

If you’ve ever waded into the sea of investment opportunities, you’ve probably learned that there are as many different investment strategies out there as there are investment professionals. So how do you choose a strategy that’s right for you?

First, while there are many different investment strategies, there are only three real investment categories: safety, growth, and income.

The safety category, not surprisingly, refers to how secure your principal is. Some savings vehicles, such as Certificate of Deposits (CD) and fixed annuities, offer little or no risk to your principal.

CDs are instruments that are insured up to $250,000 by an insurance corporation backed by the Federal Government. Most investment vehicles are not covered by this same protection. Fixed annuity guarantees are based on the claims-paying ability of the insurer. It should be noted that all investments come with varying degrees of risk and should be evaluated carefully before investing.

The goal of investments in the growth category is for them to increase in value over of a period of time. This increase in value is called appreciation, and it may allow you to eventually sell the investment for more than you paid.

The third investment category – income – offers investors just what its name implies: income in the form of regular payments over an extended period of time.

Regardless of the investment category you select, be advised that there are risks of fluctuating prices and the uncertainty of rates of return and yield inherent in investing, so that when you sell your investment, it may be worth more or less than the original cost.

Your Investment Goals

Chances are probably good that your investment goals fall into one or two of these three categories. If, for example, you’re retired or considering retirement, and will be depending on the income from your investments to supplement Social Security, you’re probably ready to look at shifting your investment goals from accumulation – growth – to investments offering both safety and current income.

On the other hand, if you’re still in the accumulation phase, you’re probably more interested in growth-oriented investments. You may even be willing to speculate a bit in higher risk investments in an effort to achieve your retirement goals.

Successful Investing

One of the keys to successful investing is making sure the investments in your portfolio match your investment objectives.

For some investors, that’s not as easy as it sounds. Many, especially those in busy professions, such as physicians, simply don’t have the time to spend poring over performance reports or meeting with financial advisers. The result: many have assembled their portfolios piecemeal, without any overall strategy. Thus, the resulting collage of individual stocks, bonds, annuities and other financial products probably doesn’t meet their needs as well as it should. Their portfolios could easily be loaded with growth instruments, when what they really need, depending upon their age, is safety and income. And vice versa.

Others have avoided investing altogether and simply placed their capital into the most convenient and secure financial instrument they could find. As often as not, that turns out to be bank certificates of deposit. When the certificates mature, they simply redeposit their principal and the resulting income in more certificates of deposit. Certificates of deposit do not typically offer the same potential for return as equity based instruments. However, in exchange for lower returns, certificates of deposit can provide a greater degree of safety. The rate of return on equity based instruments, on the other hand, will fluctuate with market conditions and may actually result in a loss of principal.

Investors seeking growth should consider investments earmarked for long-term growth, and if possible, on a tax-deferred basis.

What does your investment portfolio look like? Are you using income-oriented investments to try and generate growth? Are you maintaining enough growth in a satisfactory combination of growth and safety to outpace inflation?

Too many professionals simply don’t take the time to carefully consider their investment goals, and create a plan that will help them achieve those goals. If you’re one of these professionals, and think that perhaps your portfolio isn’t set up to reach your investment goals, make the time – while there is time - to work out a strategy for the future.

This information is for educational purposes only and should not be considered a recommendation to buy or sell any particular financial product or service. Depending on your individual situation, the topics covered may not be appropriate.

Winfield C. Greenwood, RFC® is the owner/founder of Redstone Financial Group, LLC, an independent financial services firm based in Las Vegas. He shares his expertise on business and personal financial planning with the RJ every week. Contact him at (702) 475-6363,, or connect via Facebook or Twitter.


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