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Financial tips: Building a plan for your financial future

Bill Scruggs
Thursday, Jun 6, 2013




An investment program should be built like a pyramid – with a strong foundation. The bottom of the pyramid is comprised of low-risk investments (CD’s, treasury bills), the mid-portion is composed of growth investments and the top is speculative investments, like penny stocks, options and commodities.

What is designing and managing
an investment portfolio?

Designing and managing an investment portfolio refers to a step-by-step process that helps you to pursue your investment objectives. This involves spreading investments over a variety of asset categories, such as stocks, mutual funds, cash or cash alternative investments, bonds, real estate, foreign securities, and possibly even precious metals and collectibles. How you allocate your assets depends on several factors, including your investment objectives, attitudes toward risk and investing, desired return, age, income, tax bracket, time horizon, and even your belief in what the market will do in the near term and long term.

You can start out by asking yourself some basic investment questions. For example, why are you investing? Perhaps you would like to buy a house, or maybe you want to retire early. Next, ask yourself how comfortable you are with investing. Are you a cautious investor, or are you willing to take risks? Then, take into account your time frame for investing. Are you saving for your toddler’s college education or to retire in a few years? Finally, determine what types of investments will best help you work toward your goals. In other words, what is the proper asset allocation for your particular situation? Your answers to these questions can be a starting point for constructing an investment policy and mapping out a portfolio design.

Managing an investment portfolio

Once you have settled on a plan that reflects your attitudes about investing and a portfolio design that will help you pursue your goals, the next step is managing your investments. This is the subsequent selection of investments (the actual buying and selling) in keeping with the overall portfolio design.

Managing a portfolio is one of the most important steps in the investment process.
Properly managing an investment portfolio requires knowing not only what investments to purchase, but also when to buy and when to sell them.

In addition, managing a portfolio requires constant monitoring of performance, along with rebalancing and making adjustments as needed. Unless you are considered a savvy investor, this part of the investment process is usually best left to a professional, such as a financial planner or advisor.

Bill Scruggs is a financial advisor with Raymond James Financial Services Inc., located at 430 N. Washington Ave., Suite A, in Cookeville. For more information, call (931) 520-0778 or visit RaymondJames.com/bscr. This information, developed by an independent third party, is considered reliable, but Raymond James Financial Services Inc. does not guarantee that the foregoing material is accurate or complete. This information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. The information contained in this report does not purport to be a complete description of the securities, markets or developments referred to in this material. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. Investments mentioned may not be suitable for all investors. The material is general in nature. Past performance may not be indicative of future results. Raymond James Financial Services Inc. does not provide advice on tax, legal or mortgage issues. These matters should be discussed with the appropriate professional. Securities offered through Raymond James Financial Services Inc., member FINRA/SIPC, an independent broker/dealer, and are not insured by FDIC, NCUA or any other government agency, are not deposits or obligations of the financial institution, are not guaranteed by the financial institution, and are subject to risks, including the possible loss of principal. Prepared by Broadridge Investor Communication Solutions Inc.


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