Is My Financial Planner Crazy? This Is Why Ralph Lauren Employees Are Being Told to Invest More Aggressively

Investors have plenty of options when it comes to earning a return on their money. While most people likely think of the stock market when investing comes to mind, you can also put your money in assets such as bonds, real estate, precious metals, cash, and even cryptocurrencies. According to a Bankrate survey, Americans preference towards long-term investments involve 29% real estate, 26% stock market, 17% Cash investments (savings, CDs), 9% Gold or other precious metals, 9% bonds, 6% Bitcoin/cryptocurrency, and 3% being neither of these as their preferred investment. With ample amounts of financial information online and a plethora of options to choose from when it comes to investing, it is normal for those working at Ralph Lauren to be uncertain about which decisions are right for them. When taking the case of 55 year old Virginia as an example, she and her husband read an article recommending for one’s retirement portfolio to be 100 minus their age in stocks. They also consulted another professional for financial advice. The first advisor suggested a 40% allocation towards stocks, while the second one deemed that conservative and suggested a portfolio with 75%. The reasoning behind the second advisor’s more aggressive approach was the state of the current bond market. Upon interviewing two more advisors who supported the aggressive approach, Virginia was left confused. Her finances include 1.4 million in IRAs and two properties, one of which will be paid off by retirement. Upon evaluating her options, Virginia questioned herself. Who is right? How do we make a decision with such diverse advice?

If you are a Ralph Lauren employee interested in the answer, it is likely a no. Your financial planner is not crazy. There are countless “right” ways to create a retirement portfolio, and many rules that are just rules of thumb. The approach of subtracting your age from 100 that was mentioned in the article is just one of many. Suppose you only allocated between 40-45% in stocks, here is why that seems a little too conservative:

For those employed at Ralph Lauren and now contemplating an aggressive investment strategy, it is imperative to acknowledge how said approach is not always the answer. Holding on to an aggressive portfolio may prove stressful during times of increased volatility. Furthermore, losing too much of your balance near retirement due to market fluctuations is very risky. Those seeking to retire soon should avoid compromising funds that will be drawn from in the near future. In this scenario, commonly referred to as the sequence of return risk, you would be withdrawing from a portfolio that has depreciated in value, consequently lowering future potential returns. The ideal strategy is having dedicated funds ready to invest when the market is down. This would guarantee a larger potential upside and minimize potential loss.

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For Ralph Lauren employees seeking professional financial advice, it is essential to understand that what some professionals suggest may not always be something that works for you. It is important to identify a strategy you are comfortable with, and a qualified CFP will do their best to accommodate your necessities. When undergoing consulting, clearly establish your concerns, fears, hopes, and goals to your elected professional. This will allow them to consolidate a strategy tailored to your needs.

Another strategy that advisors commonly suggest to Ralph Lauren employees is the bucket method. In this method, your assets are distributed into separate categories determined by investment time frames. An example of this strategy would be having one portion that’s very short-term, and conservatively investing it as to avoid losses in case withdrawals need to be made. Your first bucket would hold one to two years of living expenses. This cash is used to serve as sort of an emergency fund, this is the cash you will be using to pay day-to-day living expenses. Another portion would be a mid-term investment pool (which could be like the 100 minus your age strategy). Bucket 2 will contain, depending on who you talk to, five to ten years’ worth of living expenses. This bucket’s investment choices will consist of medium risk and return investments, such as blue chip and dividend paying stocks, High quality bonds, certificates of deposit, and other medium-risk quality investments. You’ll want to be sure this bucket earns income from a somewhat diversified portfolio design that has a long history of being trustworthy. The final portion would be the long-term portion which is the aggressive part in this strategy. The reasoning behind an aggressive long term approach is so that your money can yield increased returns without you feeling it as much if the balance drops. Since the time frame for the investment is 10+ years, you would be less worried about day to day volatility, allowing you to be more aggressive. This bucket is used for higher-risk investing such as junk bonds, commodities, and riskier stocks. Expect to not touch the money in Bucket 3 for at least ten years. It has to be able to withstand market swings and have time to earn the largest return possible. It is also worthy to note how depending on your time until retirement, how long you need your money to last, and your risk tolerance level, every individual will add different sums of money to each bucket. For instance, if you’ve got plenty of cash to last you thirty years of retirement or more, you’re over 50, and you’re not a big risk-taker, you might want to put 75% of your remaining (after Bucket 1) funds into Bucket 2 and 25% in Bucket 3. However, if you’re barely 30 and okay with higher-risk investing, you may want to reverse those numbers.

Essentially, investment strategies can’t always be focused on returns. For Ralph Lauren employees, the best strategy is one that makes sense and satisfies the way they feel about their savings. If you are a person who is easily stressed by market volatility and day to day fluctuations in your account balance, then it is imperative that you let your advisor know. Furthermore, it is important to understand that although you may be 50 or older, considering an aggressive portfolio at this point in life is completely justifiable and far from crazy. With everything taken into account, Ralph Lauren employees may benefit from seeking professional financial advice when uncertain of which investment strategy is right for them. By contacting The Retirement Group, you may partake in a complimentary cash flow analysis and consult an advisor that will help you better understand which decision suits your needs.

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