Dan Kieffer, director of asset allocation at UMB Private Wealth Management, shares the basics of asset allocation, risk and return, and why “boring” investing is smart investing.
A responsible approach to your portfolio
One of the first steps to investing your money is to establish a plan that helps you reach your goal. All of your assets need to work together like a jigsaw puzzle, which in turn is the diversity of your portfolio. With a financial plan, we want to establish a time horizon and a risk tolerance so we can reach your goals.
Leverage the right amount of risk
There are different levels of risk you can take when it comes to your financial plan. It is important to work with a financial team so your entire balance sheet can be taken into account, and you ensure all of your pieces of the jigsaw puzzle are working together to create a full picture.
You could have short term assets, fixed assets or bonds and stocks. Every asset will have a different outcome and a different role to play in your financial plan.
“Boring” investing = Smart investing
The ebbs and flows of the stock market can bring a lot of excitement, but excitement could mean a short-term outcome is expected, which is more speculating than investing. Focuses on quality can have smart returns. For example, if you would like to invest in a company, a quality company might have:
- Low debt-to-income ratio
- High income return on assets and equity
- Consistent earnings year to year
Boring isn’t always bad when it comes to investing.
Trust = Transparency + Reliability + Results
When working with a financial team, transparency is key. You want your team to have integrity and tell you what they are going to do and then watch your team do exactly what they say. At the end of the day, you want your financial team to be able to solve problems for you that you can’t solve yourself. Your success should be paramount to your financial team.
Interested in learning more about Private Wealth Management? With UMB, you have a guiding partner from financial advising and wealth-building strategies, to retirement and legacy preservation plans.
