Any discussion on the fundamentals of building an investment portfolio is likely to include the concept of “diversification.” The ideas of not putting all your eggs in one basket, having some investments zig while others zag, and participating across a variety of market segments are core to portfolio construction.
Of course, investing is a means to many ends. For just about everyone, one of those goals is to build a nest egg that will allow you to live the life you want to live in “retirement.” The definition of retirement has evolved over the years. More options, more activities, and sometimes – in a counterintuitive way – different or more meaningful work have all been part of the shift. However, despite all the change, one thing remains constant: the need to create retirement income. Your retirement vision may impact the amount and importance of building income streams in retirement, but, likely, not the need.
This brings us full circle. While diversification is an oft-discussed element of investing, it’s less associated with building retirement income plans. That shouldn’t be the case. Diversification can be a cornerstone, whether you’re accumulating or utilizing your portfolio.
Here are five ideas to consider as you build your own diversified retirement income plan:
Creating and utilizing multiple retirement income streams will put you in better position to, yes, live your retirement dreams.
About the Author: JJ Montanaro is a Certified Financial Planner® professional and part of the Military Affairs team at USAA. He’s a graduate of the U.S. Military Academy and has over 20 years of financial planning experience.
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