wealth management

Iowa Fiduciary Services Part 1: Portfolio Management

Looking for Fiduciary services in Iowa? One vital aspect of your chosen Financial Planner’s duties is structuring and managing your portfolio. Here’s what you need to know.

Just because you’re retired doesn’t mean you can retire from money management. Even if you planned carefully for your retirement years, you can’t just put your personal finances on autopilot the moment you retire. You’ll still need to manage your income, your investments, and your expenses. That’s where a Portfolio Manager comes in.

What is Portfolio Management?

Portfolio management is the process of building and maintaining an investment account. You can manage your own portfolio, or hire a portfolio manager or investment advisor. A portfolio manager’s ultimate goal is to help maximize the investments’ expected return within an appropriate level of risk exposure.

Every asset class includes risk. Here are some examples:

  • The risk of keeping your long-term savings in cash makes your purchasing power more likely to erode over time due to inflation.
  • The risk of bonds is that interest rates or inflation will decrease the real return on your payout, or that the company, municipality, or nation offering those bonds defaults.
  • The risk in stocks is volatility. The market changes on a day-to-day basis. The overall value of a portfolio can fluctuate dramatically.

At Johnson Wealth and Income Management, it’s our job to communicate the potential risks you run. Our portfolio managers are solely responsible to help find, evaluate, vet, and ultimately select the companies that power our proprietary portfolio strategies. That’s why it’s important to meet with your trusted JWIM advisor on a scheduled basis that works for you. 

Helping You Retire Comfortably

Retirement income management is all about making sure your retirement savings provide enough income for your needs, and that you don’t outlive your assets. This starts with setting up and managing a portfolio that’s right for you. The Iowa-based fiduciaries at Johnson Wealth and Income Management will help you assess certain factors to help achieve a healthy portfolio. The amount of money you have when you begin retirement is one of the most important factors in determining how to manage it during retirement.

If you have a large enough portfolio, it may generate enough income so that you never need to dip into your principal. If that is your situation, a combination of bank products such as CDs and Treasury bonds to help preserve your principal, along with dividend-producing stocks and bonds may be the starting point for your investments in retirement.

If you’re like the majority of retirees in Iowa, you’ll begin retirement with a more modest nest egg that will require you to tap your principal at some point. One important decision is how much to withdraw and from what account(s). Another is how much risk you want to incur, if any, in an attempt to help grow your nest egg. If you’re married, you’ll want to take into account whether your spouse is still working and how long it will be before he or she retires.

Assess Risk, Asset Allocation & Income from Selling Investments 

As you head into retirement, you need to take a fresh look at your level of investment risk. Your timeframe is one of the biggest factors in assessing risk. It’s a good idea to reassess whether the proportion of your assets in higher-risk securities is greater than it should be.

If you’re concerned about making your money last your entire lifetime, consider the following questions:

  • What effect will taking money out of your various retirement accounts have on their ability to help grow and provide income for life? 
  • What sources of income can you count on for the duration of your retirement? 
  • How diversified are your sources of income? 

Asset allocation is a strategic approach in investing. It maintains a mix of investments in your portfolio that will help provide the return you seek, at a level of risk you are willing to take. It’s an important strategy because stocks, bonds or cash, tend to perform differently in different economic conditions. By spreading your investment principal among different types of securities, you are often able to lessen the ups and downs of your overall portfolio.

To help manage expenses and make your money last, you will likely have a combination of income-producing and growth investments.

  • Income-producing investments such as stocks that pay dividends, bank products like CDs and bonds are important in retirement because once you stop working you typically need this money to live on.
  • Growth investments, such as mutual funds and individual stocks that are expected to grow at a faster rate than their peers or overall market. These are recommended by financial professionals to help your retirement portfolio keep pace with, or outpace inflation.

Lastly, taxes shouldn’t be the primary consideration in making an investment decision. You should consider the consequences of selling investments you hold in taxable accounts. You might have to pay capital gains taxes on the profit from the sale, and that rate can be 20 percent for people in the highest tax bracket or 0 percent for those in the lowest two tax brackets. Of course, the situation is different if you’re selling investments in a tax-deferred account. You pay transaction costs, but no capital gains tax. But when you withdraw from the account, you pay tax on the amount withdrawn at your regular tax rate.

Fiduciary Services in Iowa

At Johnson Wealth and Income Management, our role is to provide fiduciary services to our clients in the state of Iowa, and ultimately to help manage your risk. This means seeking to help ensure the risk you take is part of a bigger plan that’s appropriate in order to meet your financial needs and goals. 

Our advisors will give you peace of mind when it comes to communicating to you the risks that you are taking and how that may impact your portfolio. It’s important to note that these factors can vary widely from client to client, as there’s no one size fits all when it comes to financial planning.

As an Iowa-based fiduciary, Matthew P. Johnson from Johnson Wealth and Income Management seeks to ensure that his clients’ assets are allocated appropriately—across a mix of asset classes. It’s important to meet with us regularly to help with rebalancing your portfolio to help ensure your accounts reflect our latest asset allocation advice and, reallocate your assets to reflect changing life circumstances. In all cases, we strive to preserve the capital you need while continuing to potentially grow your wealth in the long run.

For more information on Fiduciary services and portfolio management in the state of Iowa, reach out to your trusted Iowa advisors at Johnson Wealth Income Management here.

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