Portfolio Rebalance: Weighing Risk vs. Future Income

Investors are looking at how savings and investments stack up against future monthly income needs.

The start of a new year is a natural time to make smart financial resolutions. Last year’s equity markets provided a thrill for investors, with the Standard & Poor’s 500 index up 12 percent for the year. Although the market’s success in 2014 may lead some to have tunnel vision on stocks this year, what investors should be focused on now is how to create a balance between the risk (and potential upside) of the equities in their portfolios and their need for predictable future income.
So, as 2015 gets underway and financial resolutions are defined, ask yourself, “What is my risk capacity?” as you consider making changes to your portfolio. Equity “mania” and low interest rates have led flows away from fixed income. Although the market remains strong, asking smart questions and anticipating that the market could shift will help you position yourself for the long term.
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