After struggling with my finances for more time than most people realize is possible, I began thinking more seriously about what I could do to make things right. I began working hard to go through and identify challenges that I was faced with, including the fact that I had several kids that cost a lot of money. I began thinking of ways to work on saving cash, and it was really amazing to see how much of a difference something like skipping drinks with dinner and working on finding foods we could make at home could really be. I wanted to start a new website all about creating a more solid financial plan. Check out this blog.
Asset Allocation: How Financial Planners Can Help When Determining How To Invest Your Money
When you are looking to invest your money, asset allocation is extremely important. Asset allocation involves placing different percentages of your investable money into different investments, such as United States stocks, international stocks, municipal bonds, government bonds, and real estate. This helps to minimize the chances of you taking a huge hit if one area of your portfolio loses money or takes a hit. If you are looking into asset allocation, a financial planner can help determine many things in regards to investing your money. Here are three important ways financial planners can help you with asset allocation.
Determining Where to Invest Your Money
There are many different ways that you can invest your money. There are different types of stocks, bonds, and resources that you can invest in. Unfortunately, when it comes to determining where to invest your money, there are many factors to consider. Age, income to debt ratio, retirement funds, and future goals all play a role in what percentage of your investment income should be invested in safe versus risky investments. A financial planner can look at all of these factors and help you determine where the best places for you to invest your money are.
Determining the Asset Allocation Percentages
Determining how to allocate your investment income is equally as challenging as determining where to invest it. For example, those close to retirement age will want to have a higher percentage of their portfolio invested in safe investments, such as government bonds, rather than the stock market. This is because these people don't have the time to make up the money if the stock market crashes. But a younger individual should have more of their money invested in stocks, as they tend to have a better return over bonds in the long run. A financial planner can help you to determine not only where to invest your money, but also how to allocate the money so that it is beneficial to you.
Advising You On Tax Implications
Lastly, a financial planner can help you determine the current and future tax implications based on where your money is invested. The money earned on some investments is tax-free, some can be tax-deferred, and others are taxable. You want to know how your investments can affect your taxes, so you aren't unexpectedly hit with a tax bill you weren't expecting.
It can be tough to determine where to invest your money, how to allocate it between different investments and what the tax implications are for the money you earn. A financial planner can help you get your financial portfolio in order and ensure your assets are allocated and divided up.