To ensure a comprehensive understanding and effective management of your retirement assets, we will conduct several detailed assessments and reports. These will help you align your investment strategy with your risk tolerance and financial goals, ultimately leading to a well-balanced portfolio. Here’s how we’ll get these reports and assessments done:
1. COMRA Risk Score Analysis
First, we will evaluate your current asset allocation using the COMRA Risk Score. This score will guide us in determining how much of your assets should be allocated to growth assets, while the remaining portion is allocated to lower-risk assets. This balance is crucial as it reflects your growth-oriented approach while acknowledging your discomfort with exposing all your assets to risk.
2. Rule of 100 Calculation
Next, we will employ the Rule of 100 to tailor your asset allocation according to your age. By subtracting your age from 100, we get an initial snapshot of how your retirement assets should be distributed between growth-oriented (Red/Yellow Money) and conservative (Green Money) investments. This baseline will be further refined through a detailed risk analysis to match your specific risk tolerance, thereby minimizing exposure to stock market volatility as you near and enter retirement.
3. Color of Money Report
We will generate a Color of Money report to categorize your assets into Green, Red, and Yellow Money, each representing different levels of risk and growth potential:
– Green Money: Assets aimed at principal protection with conservative returns, such as government bonds, CDs, and fixed or indexed annuities. These investments offer stability and lower growth potential.
– Red Money: High-risk assets that are subject to market fluctuations and potential principal loss. Examples include company stocks, REITs, and variable annuities. These investments are not managed for a specific purpose and carry varying levels of risk.
– Yellow Money: Professionally managed assets designed to align with your specific investment objectives and risk tolerance. These can include strategies focused on growth, income, or principal preservation. While offering greater growth potential than Green Money, Yellow Money still carries market risk and potential for principal loss.
4. Comprehensive Asset Allocation Strategy
Combining insights from the COMRA Risk Score, the Rule of 100, and the Color of Money report, we will develop a comprehensive asset allocation strategy. This strategy will be personalized to reduce market risk and volatility, ensuring that your investments are aligned with your risk tolerance and retirement goals.
5. Continuous Monitoring and Adjustments
We will continuously monitor your portfolio and make adjustments as needed. This proactive approach ensures that your asset allocation remains optimal in response to changes in market conditions, your financial situation, and your retirement timeline.
By following these steps, we will provide you with a robust and informed approach to managing your retirement assets. This process ensures a balanced allocation that protects your principal while allowing for growth, ultimately supporting a secure and stable retirement.