What do you think of when you hear the word "risk"?

Are you investing too conservatively (or not at all) to try to avoid market declines? If so, we feel that's a mistake. The biggest risk you face is not in the stock market – it's not reaching your long-term goals.

All about balance

Investing is all about balance, including balancing the return you need to reach your goals in relation to your comfort level with risk. Your Edward Jones financial advisor can help ensure you are not taking too much risk, but also help ensure you have quality, long-term investments to better help reach your goals.

If you have some time before you plan on retiring, it's important to focus on the long term – and to consider growth investments, like stocks or stock mutual funds, as part of your investing strategy.

To put the importance of growth into more perspective, take a look at the chart below. The difference between a 7% return and a 3% return isn’t simply 4%: It could be nearly $600,000 for your retirement, depending on your contributions and how long you have until you retire.

Same contributions: different returns, different results

This graph shows two lines, and both represent the same contribution to investing over time – saving $550 per month starting at age 30. One line represents those contributions earning a 7% return for a total amount of $990,000 at age 65. The other line represents those same contributions only earning a 3% return for a total amount of $405,000 at age 65, for a difference of nearly $600,000 at retirement. Source: Edward Jones. Calculations assume saving $550 per month, rounded to the nearest $5,000. Disclaimer: Hypothetical example for illustrative purposes only and does not reflect the performance of a specific investment.

By not investing, the potential size of your portfolio, and, as a result, your potential lifestyle in retirement could all be affected. So what does this mean for your investment strategy? It depends on how long you have until you plan on retiring.

If retirement is still far away

In general, if you’re many years away from retiring, more of your investments should be geared toward those that provide growth opportunities, such as stocks and/or stock mutual funds. You generally have more time to weather short-term declines and pursue higher long-term returns. It’s still important, however, to own bonds, which can help smooth out changes in your portfolio’s value over time.

If you're closer to retiring

As you near retirement, it’s harder to weather potential larger market declines. Your portfolio should start becoming more balanced between stocks and bonds in the years before you retire. Your Edward Jones financial advisor can help you position your investments to provide for the first few years of your retirement income needs, balanced with the growth needed to provide income for your later years.

The key is finding balance – not taking on too much investment risk, while ensuring you have enough growth potential to reach your long-term goals.

How we can help

Talk to your local Edward Jones financial advisor today to make sure your strategy is best positioned to help you reach your goals.