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:: A Plan Tailored to You

While there are practically as many reasons for investing as there are investors, among the more common goals is to acquire enough assets to retire comfortably at a reasonable age.

A carefully planned globally diversified portfolio is well suited to investing toward long-term goals; this is in contrast to the pursuit of securities that happened to have performed well in the past, in the hope that they will continue to outperform in the future. To be sure, "gambling" in highly risky, undiversified positions might pay off big time, but you also risk losing your life's dreams on a long shot.

Retirement Investing

Beyond simply building an investment portfolio, many questions must be answered as part of a retirement plan:

Time horizon - How long do you have to work and when do you hope to retire?
Initial investment - How much have you already accumulated?
Withdrawals and inflation - How much do you expect to spend on your way to and during retirement, and what impact will inflation have on your savings?
Risk profile - How willing are you to take investment risks that can be expected to increase returns (but may also provide more disappointing returns than planned for)?
Market returns - Considered in conjunction with your risk profile, what is a reasonable expected return for your portfolio?

An important statistical tool to help you form your savings and investment plans is known as Monte Carlo simulation. Monte Carlo software provides your advisor with an efficient way to analyze random phenomena such as market returns. The software randomly selects annual returns based upon your unique return, volatility (risk) and correlation parameters. The process is then repeated thousands of times, allowing us to report a range of possible outcomes.

The exercise can help clarify issues such as how much you can plan to spend once you retire, or how much you can expect to have saved by the time you are ready to retire. With this knowledge in hand, you can then make reasonable adjustments to your current lifestyle as needed.

Monte Carlo differs from the other primary way to complete retirement planning, known as "straight-line" planning. While straight-line estimates use a single point guesstimate to calculate future wealth, Monte Carlo analyzes and provides you with a range of wealth values that might happen, depending on factors such as whether you experience higher- or lower-than-expected market returns, or greater or lesser earnings and savings. This seems a more realistic way to evaluate reasonable odds of achieving your goal in the face of a decidedly uncertain future.

Monte Carlo analysis is sophisticated and relatively complex, as it must capture and accurately reflect the complex world in which we live. But the reports and advice you receive based on the analysis are designed to simplify the steps you need to take to achieve your long-term investment goals.

For more information regarding Dopkins Wealth Management, LLC, please contact Brian G. Cannon