Am I properly allocated?

Whether you’re just starting your career or nearing retirement, “Am I properly allocated?” will always be a relevant question to ask as you move to and through retirement.

But while you may be asking the same question, your answer might be different from others’ and will depend on several personal factors that all play a role in your investment decisions.

It is important to consider:

• Time horizon — How old are you and how long do you have until retirement?
• Risk tolerance — Are you risk-averse or do you have a high tolerance for risk?
• Current financial situation — What other assets and retirement income sources should be considered? What fixed income streams will you be receiving in retirement (e.g., Social Security, pension, IRAs etc.)?

So why is it necessary for you to adjust your allocation based on these factors? One word: risk.

At GuideStone^®, we seek to make intentional risk decisions. Unmethodical risk may often lead to unnecessary, increased volatility.

Stocks — higher risk equity tools — historically have outperformed bonds — lower risk debt instruments that promise interest. In exchange for the asserted expectations of performance potential comes a directly correlated risk of volatility. However, intentional risk can potentially be a useful tool when utilized appropriately.

Key Considerations

Generally speaking:

• Young investors may be able to afford to invest more aggressively due to a longer time horizon, so consider a higher exposure to equities in the early stages of your career.
• Investors approaching retirement may consider allocating more assets into fixed income options, potentially helping preserve investments.

We encourage you to proactively set aside the time to ensure you are properly invested, because many investors wait too long to properly assess their investments, staying in a level of risk otherwise not desired. For example, the Great Recession of 2007–2009 and the economic impact of the COVID-19 pandemic proved this assumption true, as many Americans felt the consequences of their delayed evaluation of their allocations.

On the other hand, some investors wisely set aside time to evaluate their allocations but, when unexpected volatility arises, ignore their long-term investment strategy by making quick, knee-jerk reactions about their funds. Market selloffs can be dangerous for long-term investors because they can trigger fear-driven “market timing” impulses to sell out of positions. History has shown there’s a real cost to trying to time the market. As illustrated in the chart below, missing the 10 best days in the market dating back to 2000 would essentially eliminate an investor’s gains.

Source: Bloomberg. Data displayed from January 1, 2000, through September 30, 2020. The “market” as referred to in the chart above is the S&P 500^® Index. Past performance does not guarantee future results. Index used with permission. Unlike a mutual fund, the performance of an index assumes no taxes, transaction costs, management fees or other expenses. It is not possible to invest directly in an index.

GuideStone offers three approaches that make it easy to select the right investments for your retirement plan.

Whatever the timeline, periodically evaluate and possibly adjust your retirement portfolio along your investing journey and do not try to time the market.

Why wait?

Contact a customer solutions specialist by calling 1-888-98-GUIDE (1-888-984-8433), Monday through Friday, from 7 a.m. to 6 p.m. CT. You may also implement the asset allocation selection yourself through MyGuideStone^®. Additionally, if you would like to speak with an advisor, we offer a range of advisory services. Learn more.