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Experienced investors know all too well the importance of asset allocation when building or restructuring their portfolios. In your younger years, you may have been either too cautious or too confident when choosing investments, especially if you didn’t have a financial advisor by your side. However, now that you better understand your goals and the roads to get there, you can balance your portfolio using a more nuanced, informed approach.
Your risk tolerance and long-term goals typically compose the asset allocation of your portfolio. Depending on the time you have to reach financial goals and the current assets in your portfolio, you may implement one of the following strategies:
Conservative Portfolios
Conservative portfolios protect the portfolio’s principal value and typically avoid heavy investing in the stock market or other volatile investment strategies. These are ideal for investors approaching retirement who are focused on creating passive income strategies that will sustain them and their families. However, investments in blue-chip stocks and large-scale commercial real estate can help bolster your portfolio against inflation and provide great assets for family members as an inheritance.
Balanced Portfolios
Moderately aggressive or balanced portfolios are ideal for middle-aged and seasoned investors who are still looking for growth but are starting to think about their finances more carefully. A careful balancing act between your fixed-income securities and equity investments can help you achieve more aggressive financial goals while protecting yourself from significant losses. This is an ideal portfolio model if you have a slightly higher risk tolerance and are staving off retirement for at least five years.
Aggressive portfolios
Aggressive portfolios are heavily saturated with equities and other risk-tolerant investments such as new construction real estate. Typically new investors begin with an aggressive strategy, not only to maximize growth potential but to learn from trial and error what works for their goals. However, confident investors can still use aggressive portfolios as they reach retirement if they have other income streams that guarantee financial stability for themselves.
Rebalancing your portfolio as your priorities, life stages, and market conditions change can help you maximize long-term growth and feel stable even in times of uncertainty.
The Importance of Commercial Real Estate To Balance Your Portfolio
Commercial real estate is a part of any portfolio strategy for good reason. Multi-tenant properties can help protect you from tenant trouble, while large-scale industrial & multifamily properties can provide incredible growth opportunities. In addition, real estate assets are more stable passive income sources than equities but still provide long-term growth if you have the time and patience to watch them grow.
Legacy offers investors a clear path to success in commercial real estate. Whether you are looking into a 1031 exchange or are ready to invest in a new property, we have the tools and team to ensure you meet your goals. Contact us for a consultation or browse our current portfolio to learn more.