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Vacation and Retirement: Different Goals Require Different Investment Strategies
vacation funds exactly when you
need them, and you don’t want
to be slapped with some type of
early withdrawal or tax penalty.

By Mark D. Berghuis,
aaMs®, CrPC®
FinanCial aDvisor
eDwarD Jones investMents
kenosha

To achieve any of your financial
objectives, you need to save and
invest – that much is clear. But
just how you save and invest may
differ from goal to goal. Let’s look
at two common goals to see the
differences in your savings and
investment strategies.
The first goal we’ll consider is
a dream vacation – one lasting a
couple of weeks or more, possibly
to an exotic locale. So, for the
investments you’ve designated
to fund this vacation, you need
two key attributes: liquidity and
low risk. The liquidity requirement
is pretty self-explanatory – you
want to be able to get to your

The low-risk part of your
vacation strategy means you
want investments that won’t drop
in value just when you need to
sell them to use the proceeds
for your trip. However, you need
to be aware that those types of
stable value investment vehicles
likely will not offer much growth
potential. As you may know, the
investments with the greatest
possible rewards are also those
that carry the highest degrees of
risk. Yet, by starting to invest early
enough in more conservative
investments, and putting away
money regularly, you may be
able to compensate for the lack of
growth opportunities.
Now, let’s turn to your other
goal – retirement. When you
are saving for retirement, your
primary objective is pretty simple:
to accumulate as much money as
you can. Consequently, you will

need a reasonable percentage of
your portfolio devoted to growthoriented investments. But what’s
a reasonable percentage? There’s
no one-size-fits-all solution – the
amount of growth investments
in your portfolio should be based
on several factors, including your
age, risk tolerance and projected
retirement lifestyle.
Furthermore, this percentage
may need to change over time.
When you’re just starting out in
your career, you may be able to
afford to take on the greater risk
that comes with having a higher
percentage of your portfolio in
growth investments. But as you
get closer to retirement, you
might want to begin shifting
some dollars toward more
conservative vehicles – you don’t
want to be over-exposed to the
volatility of the financial markets
just when you need to start
selling investments to help fund
your retirement.
Nonetheless, you won’t want
to give up all growth investments,

even during your retirement years.
You could spend two or three
decades as a retiree, and over that
time, inflation could take a big
toll on your purchasing power.
To counter this effect, you will
need to own some investments
that have the potential at least
to equal, and ideally outpace, the
cost of living.
The examples of taking that
extensive vacation and enjoying
a long retirement illustrate the
importance of recognizing that
you will have many goals in life
– and you’ll need to prioritize
and plan for them, sometimes
following significantly different
investment strategies. When
you do, you’ll give yourself a
better chance of reaching your
destinations.
This article was written by
Edward Jones for use by your local
Edward Jones Financial Advisor.

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