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COVID-19 Update

Alliant Wealth Advisors is an "essential business" under Virginia state law and we remain fully operational during the COVID-19 crisis.

To keep our clients, staff and colleagues safe we are currently holding all meetings via video conferencing. And we are alternating a small number of staff in our office while the majority serve you from their home.

Speaking of our office. Our headquarters in Prince William will relocate to the Signal Hill Professional Center at 9161 Liberia Avenue, Suite 100, Manassas, VA 20110 effective Monday, April 20, 2020.

Whether we are virtual or in person, we are here for you. Please keep safe.

Best Regards,

John Frisch, CPA/PFS, CFP®, AIF®, PPC®

President

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Properly Investing for Retirement – Part 1: First Things First

July 2, 2021

Here is the situation: You’ve been saving for retirement for years, and you now have a meaningful nest egg. You are getting to the age when you realize you need to be properly invested to achieve an enjoyable standard of living in retirement. But what is “properly”? What if you make a mistake?

There are three moves for investing effectively for retirement. First, design your ideal investment portfolio (using asset allocation). Second, implement your design with investments. Third, stick with your carefully constructed portfolio once you’ve built it, so it has time to work as planned.

Instead, I often see investors mixing up their moves. Focusing on investments first, they select the recent best-performing funds. Or they invest mostly in tech or dividend-paying companies. As a result, they inadvertently omit major asset classes from their portfolio, which, if included, can both enhance overall returns and reduce portfolio volatility.

And are your retirement accounts mostly held in index funds? There’s nothing wrong with that. Index funds are built to track the performance of a specific index, like the S&P 500, and can be a great way to inexpensively capture such returns. But did you buy the index funds to implement your thoughtfully diversified investment portfolio, or did the funds you purchased determine your portfolio’s diversification (asset allocation)?

Fund selection is supposed to be your second move, or how you implement your desired asset allocation, after you’ve designed it. Designing an appropriate asset allocation is your first move, because it is by far the greatest determinant of investment outcomes. Implementation (with index funds or otherwise) is of secondary, and much less, significance.

In other words, choosing the best index funds on the planet won’t make up for poor design. Investment success or failure is based primarily on how effectively you’ve allocated your assets across available investment types, including stocks, bonds, cash, and real estate. Then, inside these broad asset classes, it matters how effectively you’ve further diversified your positions into (for example) large versus small company stocks, U.S. versus foreign company stocks, high-quality versus low-quality bonds, and so on.

So, how do you determine the right asset allocation for you and your retirement? That’s a great question, and one I’ll address in my next piece.


John A. Frisch, CPA/PFS, CFP®, AIF®, PPC™ founded Alliant Wealth Advisors in 1995 and has over 30 years of experience as a financial professional. In his free time, he’s an avid long-distance runner, a sport that requires discipline, patience and vision. John applies these same skills to his professional pursuits: He helps families and retirement plan sponsors adopt a patient, disciplined approach to overcoming financial challenges and reaching their distant goals along a clear path. Learn more at www.alliantwealth.com.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Tags: asset mix, index fund, portfolio

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