A Guide to Your Investing Identity
Knowing what investments you need means understanding who you are as an investor.
Consider Who You Are
Many people say they want growth, but at the first sign of market trouble, they might second-guess that plan. Some may try an aggressive approach without considering the risks involved. Others think they’re comfortable in conservative investments but don’t know what they could be missing in the long run.
What about you? While there are no simple answers, consider the following questions and explore how much you know about your investments—and yourself.
How would you describe your investment knowledge and experience?
I’m not sure if I’m saving enough and if I’m investing in the right products.
You’ve come to the right place. We focus on helping people invest enough to support their goals for the future. Keep going to find out more about your investing identity.
I’m fairly confident but need confirmation that my current path still works.
Let’s build on what you already know about investing—and about yourself. Keep going to find out more about your investing identity.
I have a solid plan and am interested in incorporating new strategies.
Let’s dig in! You know there’s more to investing than traditional large-cap stocks. Keep going to find out more about your investing identity.
What’s your general plan for investment growth?
I know that my money needs to grow. Beyond that, I’m not sure.
You know you need to invest for the future, but getting there takes some homework. Keep reading and consider the following questions as you determine what kind of growth you might need.
I want to preserve my money, so I’m not focusing much on growth potential.
Preserving your money is obviously important to you, but don’t forget about keeping up with inflation and growing your money for your future.
I definitely need my money to grow, but I’m more measured in my approach.
Will a moderate amount of growth get you to your goals? Consider your age and when you’ll need the money. Read on to determine if you need to look for more (or less) growth.
I know that I need to embrace risk to get the kind of growth potential I need for the future.
Understanding your need for risk is important—as long as you’re choosing the right risk for your situation. Read on for other considerations.
How would you describe your current and future income sources?
My income isn’t a sure thing, so I need to be careful with spending.
Growth is still necessary for your future, but it’s critical that you’re properly diversified to manage risk. When you have an uncertain income, you’ll need to aim for a balanced portfolio that you can rely on.
I’m fairly confident in my current income but am not sure how much it will increase.
Growth is necessary for your future, so it’s important to build a balanced portfolio to keep you on track along the way.
I’m very confident that my income is steady now and will increase in the future.
Your increasing income and contributions to investment accounts may help your confidence when investing in growth.
Are you on track for your goal, based on your current age and income?
How do I know if I'm on track? Read Checkpoints: Have I Saved Enough to learn more.
I may not be saving enough, but I’m not sure where to go from here.
Need to make up for lost time? More aggressive investments may help, but it’s important to balance your need for growth with potential risks.
If you’re off to a slow start, there are other strategies to help boost your savings without increasing your risk level.
It looks like I’m where I need to be, but how do I stay confident that I’m doing the right thing?
Remember, these numbers are an estimate and your own situation might be different. Make sure your portfolio has the potential to grow with you.
My current savings and investments are more than enough at this point.
Great! Be sure that your contribution amounts and investment portfolio evolve along with your life stage. Most investors will need to adjust their allocations to stocks, bonds and cash as they get older or as their situations change.
How much of your portfolio is currently in stocks (individual stocks or stock mutual funds)?
I haven’t checked recently or don’t really keep track.
Your situation might have changed since the last time you reviewed your investments. Now might be a good opportunity to gather account statements for a look at your overall portfolio.
My portfolio is all or almost all stocks.
Depending on your age and situation, it could be the best mix for you—but only if you have a high risk tolerance and a long time before you need the money.
I’m mostly invested in stocks, with some bonds or other investments.
This mix might be the best option for you as long as you’ve carefully aligned the growth potential of your stocks with your goals and time frame.
I think I’m pretty balanced with my investments.
A balanced portfolio doesn’t necessarily mean equal stocks and bonds. You might need more growth depending on your goals and time frame.
Less Than Half
I don’t want too much of my portfolio in stocks.
Most investors—even retirees—will need growth from stocks to lower the chances of running out of money in during a long retirement.
What kind of stocks do you own?
I don’t know which categories my stocks belong to.
All stocks are not created equal. Some have more growth potential or risk than others. It might be a good time to dig into the types of stocks you own.
Mostly Large Companies
I look to the steady growth potential of solid, large companies (large-capitalization stocks).
There’s more to stock investing than the big names. Large caps can still be your core stock holding, but small and mid caps or non-U.S. stocks can also complement your existing holdings.
Mostly High Growth
If I’m going to invest in stocks, I want the most growth potential.
High-growth stocks—like international or small company stocks—go hand-in-hand with risk. Market volatility can have an outsized effect on riskier investments. Do you have a backup stock plan?
I do invest in a mix of stocks (U.S., non-U.S., various company sizes) but I’m not sure if I’m properly diversified.
Diversification is more than just the quantity of stock, bond and cash investments. Each piece should complement your portfolio as a whole.
I carefully select a variety stocks and consider cap sizes, regions and strategies.
Do you adjust or rebalance your portfolio regularly? Even a comprehensive portfolio needs occasional alignment—whether that’s to account for the markets or your changing needs.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.
This information is for educational purposes only and is not intended as investment or tax advice.
Rebalancing allows you to keep your asset allocation in line with your goals. It does not guarantee investment returns and does not eliminate risk.
This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.