By Bill Taber
When you’re just starting life as an adult, building your portfolio to safeguard your retirement may not be the first thing on your mind.
But procrastination in building your portfolio can affect your future finances. Some may even wait as long as their 30s or 40s to start taking investing seriously. Others may find themselves on the brink of retirement without feeling stable in their investments.
By starting early and investing regularly, you put yourself in a better position to compound your returns and set yourself up for a comfortable retirement. No matter where you are in your financial journey, it’s important to get a head start as early as possible.
Here are the key strategies and approaches to building your portfolio you need to know.
Set Your Financial Goals
Some investors wait until they have everything figured out before they set goals. While that’s understandable in the earliest stages of investing, you need to set obtainable goals, even if you aren’t sure how the future may play out.
You can start building your portfolio by setting up an emergency fund—something all investors should do—and then start to pay off debts. As you continue to make progress, other, larger goals like buying a house or saving for retirement may take shape. Focus on these goals, as they can play a big part in your strategy for long-term financial success.
Evaluate Your Risk Tolerance
Young investors sometimes gravitate toward high-risk, high-reward investment opportunities. Investors who are closer to retirement may look for investments that help maintain their purchasing power during periods of rising price inflation.
Know how much risk you’re willing to accept. You might decide to build your portfolio with a mix of high-growth investments and steadily earning value opportunities. Either way, take the time to assess your approach to risk and price volatility carefully and rationally.
Diversify Your Holdings
Building a diversified portfolio of undervalued investments is an excellent means to mitigate risks. When you spread your investment capital across a range of different sectors, industries, and types of investments—such as stocks, bonds, real estate, and commodities—you can potentially rely on some overperforming investments to make up for losses in sectors experiencing a downturn.
Start a Retirement Account
The sooner you can set up a 401(k) or IRA, the greater the chance it can produce the magic of compounding returns over a longer time, seriously growing the money available for your retirement or later years. By reinvesting instead of taking withdrawals, you can experience compounded growth on your earned interest, dividends, and capital gains.
Leave yourself as much time as possible to generate these returns. Start a retirement account as soon as you can. Learn the differences between traditional IRAs and Roth IRAs and their tax implications.
Strategize Your Withdrawals in Retirement
How you distribute funds from your retirement accounts can affect your taxation in later life. Some make systematic withdrawals for the same amount every month. Others may choose between taking distributions from retirement or other non-retirement investment accounts to keep the tax impact from the withdrawals to a minimum in any given year.
Another option to consider is taking a “sustainable” level of distributions from your accounts, an amount that comfortably covers your current expenses—but also allows the value of your accounts to increase in the future.
Get Help Building Your Portfolio
A financial professional can help you build a winning portfolio tailored to your needs that can sustain you throughout your life and retirement. TABER Asset Management can help you start early, invest regularly, and leverage the magical power of compounding.
Get started today by scheduling a 15-minute intro phone call online or reaching out to us at 515-557-1860 or invest@taberasset.com.
About Bill
Bill Taber is President and Founder of TABER Asset Management, an independent, fiduciary wealth management firm that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. With more than four decades of experience, Bill is dedicated to building relationships with his clients and their families and walking alongside them as they navigate financial decisions. His favorite days are the ones when he gets to witness the joy and relief on his clients’ faces when they realize they can pursue their dreams and live their ideal lifestyles.
Bill is known for going the extra mile, getting things done with integrity, and working with a stewardship mentality.
Bill graduated from the University of Iowa with a bachelor’s degree in business administration and fell in love with the profession when he got to help one of his first clients—his father—turn his lifetime of hard work into a dream retirement. He got his start in the industry as a corporate services representative for Bankers Trust Company and spent decades working as Assistant Vice President of E.F. Hutton & Co. and First Vice President of Principal Financial Securities. He is also a graduate of the E-Myth Worldwide Mastery Business Development Program and is Series 65 registered.
In his spare time, Bill enjoys giving back to his community and spending time with his family. His hobbies include traveling, gardening, reading, and practicing yoga, Pilates, and meditation. He also loves the simple joys of listening to music, going for walks or bike rides, and being in nature. To learn more about Bill, connect with him on LinkedIn.
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