This section refers to general investment objectives, not the client's specific needs such as retirement at a certain age or college plans for his/her children (see the next section on capital needs). However, there is certainly a correlation between the two, and it is useful to know the characteristics of each of these investment goals:
- Preservation of capital - the investor is more concerned with safety than return. Treasury bills and money market funds may be most appropriate.
- Current income- the investor needs a portfolio that produces steady income for current living expenses. Bonds, annuities, and stocks with high dividends (such as utility stocks) may be appropriate.
- Tax-exempt income - the investor's
- Growth and income - the investor is looking for a portfolio that generates some amount of income, but he/she is looking for capital appreciation as well (often for protection against inflation). Appropriate investments could include a mix of bonds and stocks.
- Capital appreciation - the investor's goal is likely retirement or another event in the future, where growth is required and current income is not needed. A diversified stock or mutual fund portfolio is appropriate.
- Aggressive growth - the investor is looking for high-risk investments with a potential for very large returns. This is rarely the goal for an entire portfolio, but rather for a specific portion of assets. Aggressive growth funds and small-cap issues may be most appropriate.
FINRA Conduct Rule 2310
Managing WealthYou might know about different asset types, but do you know how each type contributes to a particular goal?
RetirementWe will design a portfolio that should balance the requirements of liberal income with sufficient liquidity to withstand down markets.
InvestingDefining how investments are managed and monitored can help investors meet their goals.
RetirementFind out which three mutual funds offer the best combination of consistent performance and low cost for your retirement income portfolio in 2016.
InvestingUnderstanding yield vs. total return is essential in constructing portfolios that meet income generating needs while providing growth for the future.