Search Results

The end of 2022 will be here before you know it. And you don’t want it to pass without checking in on your financial plan. Doing so helps you stay ahead of year-end deadlines and maybe even identify areas for improvement going into 2023. As you prepare for your year-end checkup, download our end-of-year checklist , and consider asking your financial advisor these important questions to get the conversation started. Question 1: Am I On Track To Hit My Financial Goals This Year? Do you remember the goals you set 12 months ago? No? Well, now is an excellent opportunity to remember what you hoped to achieve and check your progress toward those goals. Perhaps you’re preparing for retirement in the next 5 years, or maybe you’re making a cross-state move, or you’re hoping to shore up your cash reserve. Since your financial advisor should be well-versed in your goals, they’ll be able to help you understand how your financial choices either are or aren’t supporting those initiatives. For example, did you overspend on travel this year? Is your portfolio still aligned with your timeline, risk, and goals? Is your net worth where you want it to be? No matter what, it’s important to talk with your financial advisor to ensure you’re on the same page. Maybe your goals changed, or you simply placed them in a different order of priority when you first discussed them with your advisor. That’s okay; life changes and your plan should adapt with it. If you are on track, great! Have a follow-up discussion about how you can build on that momentum heading into next year. If not, be sure to discuss with your advisor about recommendations for how to improve and why those are the steps to take. Question 2: Is There Anything I Can Do To Put Myself In A Better Tax Situation? This question is a must! Year-end tax planning is critical because many of retirees' most notable tax-saving moves have a December 31 deadline. Ask your advisor if there are any strategies you should consider before year-end. Many of your options will involve choosing between accelerating or deferring income . While you won’t be able to avoid taxes entirely, you often have some choice regarding when you will pay them. Your advisor should be able to help you identify the best time. Some topics to discuss with your advisor include: Do you plan to itemize or take the standard deduction? What deductions or tax credits are you eligible to claim? Can you save any more for retirement or other vehicles, like an HSA or deductible IRA, that could lower your taxable income? Does a Roth conversion make sense? Are you investing in a tax-conscious way? Remember that tax-loss harvesting must be completed by December 31! Are you properly leveraging your charitable giving strategy? Retirees have several options like a QCD, DAF, donating appreciated assets, and more. Question 3: Is My Estate Plan Up To Date? Take some time to look at your estate planning documents each year. You don’t have to re-hash the entire process, but a quick review can help you ensure the documents and choices still reflect your estate planning goals. Is your will still accurate? What about a medical directive? Do you have a power of attorney? Even something as simple as updating beneficiaries due to typical family changes (birth, death, marriage, and divorce) can save your family a lot of grief and hassle down the road. Your financial advisor can help you talk through these things and coordinate with an estate planning attorney if you need to update them. Question 4: What’s The Best Way To Give To Charity? There are so many ways to give to charity beyond cutting a check, especially for retirees, and some of these ways also provide additional tax benefits. Before the end of the year, ask your advisor about: Qualified Charitable Distributions (QCDs) . If you are subject to RMDs you don’t necessarily need for living expenses, consider donating them directly to the charity. When you do this, you can avoid taxes on the distributions. Donor Advised Funds (DAFs). If you regularly donate, ask your advisor about DAF strategies. Many retirees find it helpful to “bunch” multiple years' worth of donations into a single year. Doing so is especially helpful if you must clear the itemization hurdle to take advantage of other deductions. Don’t forget you can also give your time! Volunteering regularly is an excellent way to contribute to your community and meaningfully impact causes you care about. Question 5: Is My Investment Strategy Still Aligned With My Needs? Your investments fluctuate throughout the year, so it’s a good idea to review them and see if you need to rebalance them even if your performance has been good and you haven’t changed any goals. If your goals have changed, you may need to re-evaluate your asset allocation. Ask your advisor to review your plan and highlight what has (and has not been) working for you this year or what you might need to change in the future. Question 6: What Issues Should I Consider During a Recession or Market Downturn? Nobody likes a recession. But, when the economy gets hit, there are steps you can take to improve your financial situation in many areas, including: Cash flow Assets and liabilities Tax planning Retirement planning investments Broader investment management Longer-term planning considerations For example, will your cash flow be tight? Your financial planner may help you review your budget to help reduce spending, especially with discretionary spending. Is your investment portfolio down? It may make sense to harvest losses now to help reduce capital gains in future years. Perhaps rebalancing your investment accounts could also keep your money and risk better aligned in down markets. If retirement is around the corner, actions you take during a recession can help ensure that you make financial decisions that keep you on track. Do you need to make any changes to your retirement accounts, like allocations? Here’s a comprehensive checklist of issues to consider during a recession or stock market correction. Bonus: Based On My Goals, What Financial Changes Should I Make In The New Year? Perhaps the greatest benefit of financial planning is knowing which steps to take in advance. After you’ve reviewed your plan, goals, and progress with your advisor, ask them to outline the steps you can make in the new year to put yourself in the best position possible. Examples of things you should discuss are: Do you have to change your retirement withdrawal plan? How much do you need a month? Do you have to curb your spending given market conditions? Perhaps you can look to decrease costs by dropping unnecessary insurance policies and redirecting the premium costs to your investments. Would it make sense to purchase additional insurance or other vehicles, like an annuity? Are you maximizing your Social Security benefits? Lifestyle changes: are you planning on returning to work, traveling more, etc.? All of those things could impact the best course of action for your money. Building A Solid Year-End Plan A financial plan is a fantastic tool; it helps you live the life you want on your terms. For it to be most effective, you need to review, track, and update that plan, and the end of the year is the perfect time to accomplish that task. These key questions are some of the things we address with our clients each year and can help you initiate a conversation with your advisor too. Covenant Wealth is a fee-only fiduciary wealth management firm that is dedicated to giving custom financial advice that helps you retire confidently and comfortably. Our incredible team of advisors includes CFP ® (CERTIFIED FINANCIAL PLANNER™) professionals who can look at your finances holistically. We ask and help you answer the right questions that keep your plan working for you all year round. Don’t forget to download our end-of-year checklist and schedule a free consultation to see how we can help you improve your financial situation. About the author: Katherine Fonville Founder and Senior Financial Advisor Katherine Fonville is the founder of Covenant Wealth Advisors  and a Senior Financial Advisor. She has over 14 years of experience providing retirement income planning, investment management, and financial planning advice to individuals and families age 50 plus. Schedule your free retirement assessment today   Disclosures:   Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA . Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Retirement is a significant life transition. It brings exciting opportunities along with important challenges. The freedom to pursue personal interests comes with the need to manage limited financial resources. A recent report by the Transamerica Center for Retirement Studies examined how retirees are faring in today's post-pandemic economy. The Latest Insights on Retirement The 24th Annual Retirement Survey reveals insights into American retirees' financial situations, living arrangements, health concerns, and future plans. The survey gathered responses from 2,404 American retirees. Let's explore what they discovered and its implications for current and future retirees. The Changing Retirement Landscape Today's retirees have experienced significant shifts in retirement in America. During their careers, they witnessed: A move away from employer-funded pension plans towards employee-funded 401(k) plans. Growing expectations for workers to self-fund more of their retirement. Increasing concerns about the long-term funding of Social Security. The economic impacts of a global pandemic. These changes have created a complex environment. Retirees must navigate financial challenges while enjoying their retirement years. The survey provides valuable insights into how they manage these challenges. See How Our Firm Can Help You Retire With Confidence Will my money last in retirement? Find out when you can retire and if you'll maintain your lifestyle. How should I invest in retirement? Get personalized investing to grow and protect your wealth. How can I reduce taxes in retirement? Identify various tax strategies like Roth conversions and RMD management. Retirement Perceptions: The Good and the Bad When asked about their retirement experiences, retirees showed overwhelmingly positive associations. Here are some notable statistics: 86% selected positive words like "freedom" (68%), "enjoyment" (58%), and "stress-free" (41%). Conversely, only 37% reported negative words, including "health decline" (21%) and "financial insecurity" (18%). Despite some challenges, most retirees hold a positive outlook on this stage of life. Their top priorities include "enjoying life" (70%) and "being healthy and fit" (67%). The Financial Reality for Today's Retirees While attitudes toward retirement are generally positive, the financial landscape is complex. Retirement Income Sources Social Security remains the primary income source for many retirees: 91% receive some Social Security income. For 58% , it's their primary income source. Only 20% rely primarily on personal savings. 18% count on pensions as their main income. The median age for starting Social Security benefits is 63. Almost one-third (29%) claim benefits at the earliest possible age of 62, despite the permanent reduction in benefits that follow. Just 4% wait until age 70 to maximize their benefits. Household Income and Savings According to the survey, the median annual household income for retirees is $55,000 . However, disparities are evident: 36% of retirees have household incomes below $50,000. 32% find themselves between $50,000 and $100,000. Only 20% earn between $100,000 and $200,000. A mere 8% have incomes exceeding $200,000. Concerning savings: The median total household savings (excluding home equity) sits at $71,000 . 14% report having no retirement savings. 29% have less than $100,000 saved. Only 22% have saved over $500,000. Emergency funds present a worrying picture: Median emergency savings amount to $10,000 . 17% have no emergency savings. 31% aren't sure how much they have saved for emergencies. Debt Among Retirees Debt is still a concern for many retirees: 48% have non-mortgage debt averaging around $5,000. 30% still carry mortgage debt, with a median amount of $68,000. These financial realities explain why 30% of retirees report difficulties in making ends meet. Despite 70% feeling confident about maintaining a comfortable lifestyle throughout retirement. How Retirement Happens Interestingly, retirement doesn't always unfold as planned: 58% retired sooner than expected. Only 36% retired when originally planned. A small 6% retired later than intended. Those who retired early often cited various reasons: 46% mentioned health issues. 43% pointed to employment-related reasons such as job loss or organizational changes. Only 21% retired early because they could financially afford to. Housing and Living Arrangements Where retirees live plays a significant role in their retirement experience: 62% stayed in the same home after retiring. 38% moved to new homes. The reasons for moving included: Moving closer to family and friends (36%). Downsizing for cost savings (33%). Reducing expenses (26%). Starting a new life chapter (24%). Retirees prioritize affordable living costs, proximity to family, and access to healthcare when choosing where to live. Health and Wellbeing in Retirement Health remains a critical concern for retirees: 73% are worried about their health as they age. 37% fear the declining health that may require long-term care. 28% worry about cognitive decline or dementia. Most retirees report engaging in health management practices, such as: Seeking medical attention when needed (75%). Getting routine physicals and screenings (71%). Socializing with friends and family (64%). Keeping up with vaccinations (64%). However, fewer are focusing on critical areas like stress management (39%) and mental health support (13%). Planning for the Long Term Most retirees expect long lives, with a median anticipated lifespan of 90, suggesting a typical retirement span of about 29 years. Despite this, many lack proper planning: 19% possess a written financial plan for retirement. 44% have an unwritten plan. 37% have no financial plan at all. When it comes to long-term care, many retirees aren't fully prepared, relying on family or friends instead of professional services. Legal documents show similar gaps, with 52% having a will and 28% lacking any legal documents. Insights for Future Retirees The survey offers valuable insights that younger generations should heed: 76% wish they had saved more consistently. 68% wish for better knowledge about retirement saving. 49% feel that debt hindered their ability to save properly. Future retirees should take practical steps based on the experiences of today’s retirees. By heeding their wisdom, they can enhance their own retirement readiness. Retirees' Policy Priorities In discussing government policy, retirees highlighted the following priorities: Addressing Social Security funding issues (82%). Tackling Medicare funding shortfalls (71%). Making healthcare and prescription drugs more affordable (64%). Ensuring that all workers can save for retirement at work (50%). Making long-term care services affordable (45%). What This Means for You Whether you are currently retired or still planning for retirement, the insights from this research offer essential takeaways. For Current Retirees: Create a written financial plan to ensure your savings last your lifetime. Consider delaying Social Security for maximum benefits. Address long-term care needs early to avoid crises later. Establish important legal documents like wills and advance directives. Prioritize both physical and mental health for holistic well-being. For Future Retirees: Save consistently and begin early. Educate yourself about retirement planning. Manage debt strategically to ease burdens. Consider phased retirement for a smoother transition. Prepare for an earlier-than-anticipated retirement. See How Our Firm Can Help You Retire With Confidence Will my money last in retirement? Find out when you can retire and if you'll maintain your lifestyle. How should I invest in retirement? Get personalized investing strategies. How can I reduce taxes in retirement? Find tax strategies relevant to your situation. The Big Picture The Transamerica survey presents a portrait of retirees who generally enjoy retirement despite encountering financial limitations. Social Security serves as a financial backbone, while personal savings play a supportive role. Protecting Social Security is crucial for current and future retirees. Many retirees leave the workforce earlier than expected due to various unforeseen factors, emphasizing the significance of flexible planning and saving early. Yet, the most valuable insight comes from current retirees who highlight their regrets, including not saving enough and not learning more about investing. These simple yet impactful takeaways guide everyone to improve retirement prospects. Final Thoughts Retirement is a personal journey filled with unique circumstances. The insights from this survey provide essential guideposts, shedding light on common challenges. Learning from retirees’ experiences can help us make informed retirement planning decisions. Despite financial obstacles, the majority of retirees still associate this time of life with positive feelings of freedom and enjoyment. Balancing financial security with non-financial pursuits contributes significantly to how satisfying retirement can be. Through thoughtful preparation for both financial and personal aspects of retirement, we all have the chance to join the 86% of retirees who view this stage positively. About the author: Megan Waters, CFP® Financial Advisor Megan Waters is a CERTIFIED FINANCIAL PLANNER™ professional at Covenant Wealth Advisors . With over 14 years of experience, Megan graduated from the Honors College at the College of Charleston, obtaining a degree in Economics with a minor in Environmental Studies. Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal. The views expressed here are subject to change based on market conditions. This article features data from the TransAmerica's Center for Retirement Studies 24th annual retirement survey. Consult with legal or financial advisors for your individual circumstances.

Are you asking the right retirement questions to your employer? Many professionals approaching retirement feel unprepared regarding essential details about their retirement benefits . They often wish they had learned this information years earlier. Download Now: 15 Free Retirement Planning Checklists [FREE DOWNLOAD] At Covenant Wealth Advisors, we’ve encountered numerous situations where asking the right questions early on could have vastly improved our clients’ retirement outcomes. Here's what you need to know. Key Takeaways Understanding your employer's retirement benefits can significantly boost your retirement savings. Many employees miss valuable benefits by not grasping their company's retirement match formula. Knowing your vesting schedule can prevent leaving money behind when changing jobs. Special retirement benefits, like mega backdoor Roth contributions or deferred compensation plans, are often overlooked. Early retirement options and retiree healthcare benefits can greatly impact your retirement planning . Table of Contents Understanding Your 401(k) Plan Structure Exploring Additional Retirement Benefits Healthcare and Insurance Considerations Stock Options and Equity Compensation Special Retirement Programs Pension Plan Questions FAQ Section Conclusion See How Our Firm Can Help You Retire With Confidence Will my money last in retirement? Find out when you can retire and if you'll maintain your lifestyle. How should I invest in retirement? Personalized investing strategies to grow and protect your wealth. How can I reduce taxes in retirement? Identify tax strategies including Roth conversions, RMD management, and charitable giving. Understanding Your 401(k) Plan Structure The foundation of most corporate retirement plans is the 401(k), but the details can differ significantly between employers. Matt Brennan, CFP® at Covenant Wealth Advisors in Richmond, VA, emphasizes: "The most costly mistake I see is employees not fully understanding their company's matching formula. I've had clients leave tens of thousands of dollars on the table simply because they didn't structure their contributions optimally." Essential 401(k) Questions To maximize your 401(k), ask these essential questions: What is the exact matching formula? Is there a true-up provision for the match? What is the vesting schedule for employer contributions? Are after-tax contributions allowed? What are the investment options and their associated fees? Here are IRS Contribution Limits to help you understand how much money you can defer in your employer 401(k). 💡 Pro Tip : Don’t assume your employer's matching formula is simple. Some companies have complex tiered matching systems that require specific contribution patterns to maximize the match. Exploring Additional Retirement Income Benefits Employers often provide retirement benefits beyond the standard 401(k) plan. Understanding these additional options can enhance your retirement strategy significantly. Engaging a financial planner can help navigate these benefits and ensure you're optimizing your retirement strategy. Deferred Compensation Plans Some employers offer non-qualified deferred compensation plans (NQDC) that allow you to postpone receiving a part of your income until retirement. While deferred compensation plans can be powerful tax-planning tools, they come with risks that need careful evaluation. Understanding the distribution options and company credit risk is crucial. Healthcare and Health Insurance Considerations Let’s face it— healthcare costs can eat into your retirement savings if you’re not prepared. Your retirement date marks a shift from employer-provided health and life insurance to personal responsibility for healthcare coverage. Understanding your employer’s healthcare benefits when you retire can be invaluable! Critical Healthcare Questions Does the company offer retiree health insurance? What happens to my HSA when I retire? Is there a transition plan to help bridge the gap until Medicare eligibility? Are there wellness program benefits that extend into retirement? 💡 Pro Tip : If your employer offers an HSA-eligible health plan , consider maximizing contributions even if you are healthy. HSAs offer triple tax advantages and can be an excellent way to save for future healthcare costs. Stock Options and Equity Compensation Understanding your equity compensation can be complex—as intricate as a Rubik's cube! It's essential to comprehend the income tax implications of exercising stock options to avoid unexpected tax liabilities. “One of the biggest mistakes we observe is clients exercising stock options without considering the tax implications,” notes Scott Hurt, CFP®, CPA at Covenant Wealth Advisors . “A strategic exercise plan can potentially save hundreds of thousands in taxes.” Key Questions About Equity Compensation Consider these critical questions regarding your equity compensation: What types of equity compensation do I receive (RSUs, ISOs, NSOs)? What are the vesting schedules and expiration dates? How does retirement impact unvested equity? Are there special retirement provisions for equity compensation? Special Retirement Programs This is where things get interesting! Many companies offer special retirement programs that can be game-changers for your planning. Consider this the secret sauce in your retirement recipe! Programs to Ask About Phased retirement options Retirement transition consulting Financial planning services Volunteer or consulting opportunities Alumni networks and benefits 💡 Pro Tip : Some companies offer "retirement transition" programs that let you gradually reduce your hours while maintaining full benefits. This can be a fantastic way to test-drive retirement while still earning an income. Pension Plan Questions If you have a pension plan, dig deep into the details. Essential Pension Questions According to the Employee Benefit Research Institute, understanding these details can significantly impact your retirement planning. What are my payment options (lump sum vs. monthly payments)? How is my benefit calculated? Are there early retirement reduction factors? What survivor benefits are available? How are cost-of-living adjustments managed? Understanding Your Retirement Benefits Navigating the landscape of retirement benefits can be overwhelming, but understanding your entitlements is essential for a secure post-work life. What Retirement Benefits Am I Eligible For? Understanding your retirement benefits is crucial for effective planning. Note these essential aspects when evaluating your retirement benefits: Retirement Plan Options : Your employer may provide various retirement plans such as 401(k), 403(b), or pensions. It's vital to understand each plan's details, including contribution limits and investment options. This knowledge can help you maximize savings. Retirement Savings : Your retirement savings are a critical component. Consider additional accounts like an IRA or Roth IRA for better financial security and flexibility. Retirement Income : Your income during retirement may depend on savings, Social Security, and other income sources. A financial advisor can help create a sustainable income strategy. Retirement Benefits Eligibility : liaise with your HR to confirm your eligibility for health coverage and other perks, allowing effective planning. Early Retirement : If retiring early, know the implications on your benefits, such as eligibility for packages and phased retirement options. Full Retirement Age : Understand how your full retirement age affects Social Security benefits. Health Insurance : Knowing your health coverage options is vital, ensuring you have adequate protection against high medical costs. Financial Advisor : Financial advisors can help you navigate retirement benefits and create a comprehensive plan. They assist with investment strategies and benefit optimization. By understanding your retirement benefits and options, you can make informed decisions for a secure and comfortable post-work life. See How Our Firm Can Help You Retire With Confidence Will my money last in retirement? Follow up on when you can retire and if you'll maintain your lifestyle. How should I invest in retirement? Personalize your investing strategies to grow and protect your wealth. How can I reduce taxes in retirement? Identify strategies including Roth conversions and charitable giving. FAQ Section Q: How do I find out about benefits I might have missed? A: Schedule a meeting with your HR department, focusing specifically on retirement benefits. Request a complete benefits guide and inquire about special programs for long-term employees. It’s a good idea to bring a financial advisor to ensure you're asking all the right questions. Q: Can I continue working while collecting retirement benefits? A: This depends on the employer and type of benefits. Some companies allow collecting certain retirement benefits while working part-time, while others require full separation. Understanding these rules is critical. Q: What happens to my benefits if the company is acquired? A: Benefits may change during acquisitions. Stay informed about transition periods and any grandfathered benefits. Keep your benefit documentation handy and don’t hesitate to ask questions during transition periods. Q: Should I take a lump sum or monthly pension payments? A: This decision varies based on income sources, life expectancy, and your overall financial plan. It's advisable to work with a financial advisor to analyze your specific situation and make an informed choice. Conclusion Taking charge of your retirement future begins with asking the right questions. Think of it as putting together your retirement puzzle—every benefit is a vital piece that must fit into your overall picture. Understanding and maximizing your employer-provided retirement benefits leads to a more secure and comfortable retirement. These questions are just the starting point. Your unique situation might require additional considerations, which is where professional guidance can offer immense value. At Covenant Wealth Advisors, we specialize in assisting professionals like you in navigating these complex decisions to optimize your retirement strategy. Would you like our team to handle your retirement planning? Contact us today for a free retirement roadmap experience . About the author: Adam Smith, CFP® Senior Financial Advisor Adam is a Senior Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 17 years of experience in the financial services industry, focusing on retirement financial planning, tax planning, and investment management. Schedule your free retirement assessment today Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration as an investment advisor does not imply a specific level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and potential loss of principal capital. The views and opinions expressed here are as of the date of posting and are subject to change based on market conditions. This content includes some statements that may be considered forward-looking. Any such statements are not guarantees of future performance, and actual results could differ materially. Nothing herein should be interpreted as an offer to sell or solicit an offer to purchase any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. For personalized advice, consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER™ professional with assistance from AI. No advice can be provided by Covenant Wealth Advisors without a client service agreement. Hypothetical examples are fictitious and used solely to illustrate a specific perspective. Diversification does not guarantee against risk of loss. This guide attempts to cover comprehensive retirement planning aspects, yet no article can include all details. Consulting an advisor is recommended for thorough advice.

Understanding how to diversify your portfolio  is one of the most effective ways to manage investment risk. Diversification means investing in different assets that don’t always move up or down at the same time. This can lower how much your overall portfolio goes up and down, without drastically reducing the returns you might expect to earn over long periods of time. This charts outlines portfolios of stocks and bonds composed of the S&P 500 and Bloomberg Aggregate Bond index. Blue bars represent the annualized returns of the portfolio, while gold bars represent the volatility. Volatility is represented by the standard deviation in value of the portfolio. The black dotted line shows the ratio of annual returns to volatility of each portfolio. Date Range: 15 years ago to present. Source: Clearnomics, LSEG When you combine these different assets, the total risk of your portfolio can be less than just adding up each asset’s risk by itself. That's the magic of portfolio diversification! But... Findings from Reinholtz, Fernbach, and Langhe show that most people do not fully understand how diversification works. Many believe there is no benefit to spreading money across different investments. Some people, especially those who know less about finance, think that holding different types of assets actually makes a portfolio swing more wildly. They imagine each asset’s ups and downs piling on top of each other. The truth is that diversification is a powerful component of investment management. But, investors often struggle to figure out where to begin. Imagine you’re approaching retirement with a significant nest egg—perhaps over $1 million in investments—and you worry about how to protect what you've worked so hard to save. You may find yourself asking, “Is my portfolio balanced enough? Am I too heavy in stocks, bonds, or a particular sector?” These concerns can weigh on your mind, especially during market downturns. In this article, we’ll delve into the concept of diversification, explore common strategies, and look at best practices for reducing risk in your portfolio . Keep reading to discover actionable insights you can apply today to safeguard your retirement goals and preserve your peace of mind. Key Takeaways Diversification spreads your money across multiple asset classes to help reduce overall portfolio risk. Rebalancing ensures your portfolio stays aligned with your goals and risk tolerance. Different asset classes—stocks, bonds, real estate, and alternatives—can provide unique returns and different levels of risk. International investments may offer growth opportunities and enhanced diversification benefits . A mix of passive and active investments can balance cost-efficiency with targeted strategies. Staying informed and periodically reviewing your investments can keep your diversification strategy on track. Professional guidance, such as working with Covenant Wealth Advisors , can help tailor a plan to your unique circumstances. Table of Contents What Is Diversification? Common Asset Classes to Consider Strategies for Effective Portfolio Diversification Monitoring and Rebalancing Your Investments FAQs Conclusion See How Our Firm Can Help You Retire With Confidence Retirement Planning  - Find when you can retire and if you'll be able to maintain your lifestyle. Investment Management  - Personalized investing to grow and protect your wealth in retirement. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... What Is Diversification? Diversification involves spreading your money across different types of investments, such as stocks, bonds, real estate, and sometimes alternatives like private equity or hedge funds. By not relying on a single asset class, you reduce the chance that one poor-performing investment will significantly harm your overall portfolio. In simpler terms, think of diversification like a buffet. If you only eat one type of food, you might miss out on essential nutrients. But if you fill your plate with fruits, vegetables, proteins, and grains, you’re more likely to get a balanced meal. In the same way, a well-diversified portfolio aims to balance out the ups and downs of the market, offering a smoother investment experience over the long term. Diversification doesn’t guarantee profits or protect against all losses. However, it’s widely recognized—by experts and organizations like Investor.gov —as a core principle for prudent investment tips. Common Asset Classes to Consider Stocks (Equities) Stocks represent ownership in a company. They can offer higher growth potential but also come with more volatility. Large-cap, mid-cap, and small-cap stocks all behave differently, so consider including a range of company sizes. You can also look beyond U.S. borders for added diversification in international or emerging-market equities. This chart shows the annual returns and largest intra-year decline for the S&P 500 price index. The largest intra-year decline is measured as the steepest peak-to-trough decline for the index during the calendar year. Date Range: January 2, 1980 to present. Source: Clearnomics, Standard & Poor's Bonds (Fixed Income) Bonds are essentially loans to governments or corporations. While they generally provide lower returns than stocks , they also offer more stability. According to Morningstar, the bond market can act as a buffer when stocks falter. Different types of bonds—government, municipal, corporate—have varying degrees of risk and reward. This chart shows the annual returns and largest intra-year decline for the Bloomberg U.S. Aggregate Index using total returns. The largest intra-year decline is measured as the largest peak-to-trough decline during the calendar year. Date Range: 1988 to present. Source: Clearnomics, Bloomberg Real Estate Real estate can be accessed through direct property ownership, Real Estate Investment Trusts (REITs), or mutual funds that invest in real estate companies. Real estate often moves differently than stocks and bonds , making it a valuable diversifier. Keep in mind, however, that real estate investments can be less liquid and more location-dependent. Alternatives Alternative investments, such as commodities, private equity, hedge funds, or even cryptocurrencies, can further broaden a portfolio. These assets may not always move in tandem with traditional markets, thus providing an additional layer of diversification. However, alternatives can come with higher fees, lower liquidity, and more complexity, so it’s essential to approach them with caution. Andrew Casteel, CFP® at Covenant Wealth Advisors in Reston, VA says “Alternative investments can potentially provide uncorrelated diversification for some portfolios, but we often recommend starting small and focusing on assets that align with your overall goals and risk profile.” Strategies for Effective Portfolio Diversification Asset Allocation Asset allocation is the process of deciding what percentage of your portfolio goes into each asset class—stocks, bonds, real estate, and so on. This initial decision can often matter more than individual stock or fund selection. For example, you might decide to allocate 60% to equities, 30% to fixed income, and 10% to real estate. The ideal allocation depends on your financial goals, risk tolerance, and time horizon. The chart above tracks the performance of four portfolio allocations: 100% stocks, a 60%/40% stock bond split, 40%/60% stock bond split, and a 100% bonds. This chart are reindexed to the beginning of 2008 to show performance relative to the Great Recession. The dotted vertical lines show the annotated performance events. The 100% stock portfolio is represented by the S&P 500, while the other three use iShares U.S. Bond indices before expenses and fees. Date Range: January 2, 2008 to present. Source: Clearnomics, Standard & Poor's, Refinitv. Geographic Diversification Investing globally can potentially lower risk. Markets in different regions do not always move together, so international investments may act as a cushion during U.S. market downturns. Consider including funds or ETFs that track both developed and emerging markets for broader global coverage. Sector Diversification Even if you invest primarily in U.S. equities, spreading your money across multiple sectors—technology, healthcare, consumer staples, utilities, and more—can help guard against sector-specific downturns. 💡 Pro Tip:  Revisit your sector allocations each year. Market movements can skew your original allocations, and periodic adjustments can help you maintain the right balance. If your entire portfolio is concentrated in tech stocks, for instance, any slump in that sector could disproportionately affect your returns. This chart shows the annual total returns for the S&P 500 and each S&P 500 Global Industry Classification Standard (GICS) sector. GICS sectors include communication services (Comm.), consumer discretionary (Cons. Disc.), consumer staples (Cons. Stap.), energy, financials, health care, industrials, information technology (technology), materials, real estate, and utilities. Date Range: January 2, 2008 to present Source: Clearnomics, Standard & Poor's, LSEG Blend Active and Passive Funds Active funds allow portfolio managers to make specific picks based on research and expertise, while passive funds track indexes like the S&P 500. A combination of both strategies can offer the best of both worlds: cost-efficiency from index funds and potential outperformance from actively managed funds. Keep fees in mind; higher costs should justify the potential benefits of active management. Factor and Style Diversification Consider including different investment styles—like value and growth—and factor-based strategies—like small-cap vs. large-cap or low-volatility vs. high-volatility. By doing so, you avoid relying on one type of strategy that might only perform well under specific market conditions. This chart shows the MSCI USA Factor Index Returns. Each column represents a year. Each square shows the index returns for the year and are ordered from lowest returns at the bottom to highest at the top. Date Range: 17 years ago to present. Source: Clearnomics, MSCI, LSEG Monitoring and Rebalancing Your Investments Set a Schedule Regularly reviewing your portfolio—quarterly or semi-annually—helps you see if any asset class has become overweight or underweight. For instance, if your equities have skyrocketed, they might now make up a larger portion of your portfolio than intended, increasing overall risk. Rebalancing Tactics Rebalancing involves selling assets that have grown beyond your target allocation and buying those that have fallen behind. This process encourages you to “buy lower and sell higher,” a fundamental concept in investing. This chart shows the current composition of a stock and bond portfolio that was created in 2009, but never rebalanced. Stocks and bonds are represented by the S&P 500 and Bloomberg Aggregate Bond Index, respectively. The white dotted lines show the starting allocation. Source: Clearnomics, LSEG Keep in mind, however, that frequent rebalancing can trigger transaction fees and tax implications. While it's important to rebalance, you should also understand how often to rebalance  based on your particular situation. Tax Efficiency When rebalancing in taxable accounts, consider strategies like tax-loss harvesting , which involves selling investments at a loss to offset gains elsewhere. Tax-loss harvesting requires careful attention to rules like the wash-sale rule. Always consult with a tax professional before making major moves, as individual circumstances vary. “Successful investors often focus more on consistent rebalancing and discipline rather than chasing hot stocks or timing the market.” says Mark Fonville, CFP at Covenant Wealth Advisors in Richmond, VA . FAQs Q1: Why is portfolio diversification so important? Diversification helps limit the impact of any single investment’s poor performance on your overall portfolio. By investing in multiple asset classes and sectors, you reduce the chance that a downturn in one area will dramatically affect your total returns. This is particularly important for individuals over 50, who may not have as much time to recover from market losses before retirement. Q2: Can I be diversified by owning just a few mutual funds or ETFs? It’s possible, but you need to ensure those funds or ETFs offer broad coverage of different asset classes and sectors. Simply holding two or three funds might still leave you too concentrated if they track similar benchmarks or invest in similar stocks. Look for funds with distinct focuses—such as a total stock market fund, an international equity fund, and a bond fund—to achieve a more balanced approach. Q3: How often should I review and rebalance my portfolio? A semi-annual or annual review works well for many investors. However, you may want to rebalance more frequently if there have been significant market swings or if your portfolio allocations drift well beyond your target ranges. Always keep transaction fees and taxes in mind, as frequent changes can impact your net returns. Here's a more detailed article on how often to rebalance. Q4: What role does my risk tolerance play in how to diversify my portfolio? Risk tolerance is a key factor in determining your asset allocation. If you’re uncomfortable with the potential for large losses, you may opt for a higher percentage of bonds or other more stable assets. On the other hand, if you have a higher risk tolerance and a longer time horizon, you might include more growth-oriented equities in your portfolio. Q5: Should retirees still diversify? Yes. Retirees, in particular, benefit from diversification to help preserve capital while also allowing for some growth. A balanced approach can provide steady income from bonds and dividends, while equity exposure can help outpace inflation over the long term. Diversification becomes even more critical as you seek to protect the nest egg you rely on in retirement. Conclusion A sound diversification strategy weaves together various asset classes, geographic regions, and investment styles to help reduce your exposure to market downturns. By carefully monitoring and rebalancing your portfolio, you aim to stay aligned with your long-term goals, especially if you’re close to retirement or already retired. Remember, diversification does not eliminate risk entirely, but it can mitigate it by spreading that risk across a broader landscape. Ultimately, how to diversify your portfolio  depends on your personal financial situation and comfort with market fluctuations. If you’re uncertain about your current holdings or feel overwhelmed by the array of investment options, consider seeking professional advice. Working with an advisor, like the team at Covenant Wealth Advisors, can bring clarity to your plan and help tailor a strategy that fits your unique needs. Would you like our team to help you properly diversify your investment portfolio ? Contact us today for a free retirement assessment. About the author: Scott Hurt, CFP®, CPA Senior Financial Advisor Scott is a Financial Advisor for Covenant Wealth Advisors , a CERTIFIED FINANCIAL PLANNER™ practitioner and a Certified Public Accountant (CPA). He has over 17 years of experience in the financial services industry in the areas of financial planning, tax planning, and investment management. Schedule your free retirement assessment today   Disclosures:  Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Imagine you’re on a financial rollercoaster. The ups and downs of the market can be exhilarating for some, but terrifying for others. This is where understanding risk tolerance comes into play. Risk tolerance is a crucial concept in investing that determines how much market volatility you can stomach without panicking or making rash decisions. It’s the financial equivalent of knowing whether you prefer a gentle merry-go-round or a heart-pounding thrill ride. Download Now: 15 Free Retirement Planning Checklists [FREE DOWNLOAD] For investors over 50 with substantial assets, understanding risk tolerance is not just important—it’s essential. As you approach retirement, the stakes are higher, and the margin for error narrows. Your investment decisions now can significantly impact your financial future and lifestyle in retirement. For instance, an aggressive investor, who has a high-risk tolerance, is prepared to lose money in pursuit of potentially higher returns and focuses primarily on capital appreciation. But here’s the problem: many investors don’t truly understand their risk tolerance until they’re faced with a market downturn. By then, it might be too late. The panic selling that often follows can derail even the most carefully crafted investment plans, potentially jeopardizing years of savings and growth. Assessing your financial circumstances is crucial when evaluating risk tolerance. Factors such as liquidity needs, time horizons, and the significance of financial goals in relation to overall well-being should be considered. That’s why we’re diving deep into risk tolerance today. By the end of this article, you’ll have a clear understanding of what risk tolerance means for your investment plan and how to use this knowledge to make informed decisions that align with your financial goals and peace of mind. Key Takeaways: Risk tolerance is your ability and willingness to endure investment volatility Your risk tolerance impacts asset allocation and investment decisions Age, financial goals, and time horizon influence risk tolerance Risk capacity differs from risk tolerance and should be considered Regular reassessment of risk tolerance is crucial for effective investing, especially for individuals nearing retirement who needs to align their strategy with their financial goals Professional guidance can help align investments with your risk profile Balancing risk and return  is essential for long-term financial success All investments involve some degree of risk, which is crucial to understand for effective portfolio management Table of Contents Key Takeaways What is Risk Tolerance? Factors Influencing Risk Tolerance Types of Risk Tolerance Risk Tolerance vs. Risk Capacity How Risk Tolerance Affects Your Investment Plan Assessing Your Risk Tolerance Adjusting Your Portfolio Based on Risk Tolerance The Role of a Financial Advisor in Managing Risk FAQs Conclusion See How Our Firm Can Help You Retire With Confidence Retirement Planning  - Find when you can retire and if you'll be able to maintain your lifestyle. Investment Management  - Personalized investing to grow and protect your wealth in retirement. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... What is Risk Tolerance? Risk tolerance level is the degree of ups and downs in portfolio value that an investor is willing to withstand. It’s your ability to stay calm and stick to your investment strategy even when the market takes a nosedive. Think of it as your financial stress threshold—how much can you lose before you start losing sleep? Understanding your risk tolerance level is crucial because it helps determine the appropriate mix of investments for your portfolio . A high risk tolerance might lead you to invest more heavily in stocks, which offer potentially higher returns but come with greater volatility. On the other hand, a low risk tolerance might steer you towards more conservative investments like bonds, which typically offer lower returns but with less price fluctuation. An aggressive investor, characterized by a high-risk tolerance, often focuses on capital appreciation and is willing to endure significant market volatility in pursuit of higher returns. Scott Hurt, CFP® at Covenant Wealth Advisors in Richmond, VA , explains, “Risk tolerance is not just about how much risk you can handle emotionally. It’s also about how much risk you need to take to achieve your financial goals. The key is finding the right balance between risk and potential reward that allows you to sleep at night while still working towards your objectives.” It’s important to note that risk tolerance is not a fixed trait. It can change over time based on various factors, including your age, financial situation, and life experiences. That’s why it’s crucial to reassess your risk tolerance level periodically, especially as you approach major life milestones like retirement. Factors Influencing Risk Tolerance Several factors can influence your risk tolerance: Age: Generally, younger investors can afford to take on more risk because they have more time to recover from market downturns. As you get older and closer to retirement, you might become more conservative to protect your nest egg. Financial Goals: Your objectives play a significant role in determining your risk tolerance. If you’re aiming for an aggressive financial goal, you might be willing to accept more risk, similar to an aggressive investor who focuses on capital appreciation. If capital preservation is your primary goal, you might lean towards a more conservative approach. Time Horizon: The longer your investment timeline, the more risk you might be able to tolerate. If you don’t need the money for 20 years, you can potentially ride out market fluctuations. Income and Net Worth: Your overall financial situation impacts your ability to take risks. If you have a stable, high income and substantial net worth, you might be more comfortable with riskier investments. Investment Experience: Your past experiences with investing can shape your risk tolerance. If you’ve successfully navigated market downturns before, you might be more comfortable with risk. Personality: Some people are naturally more risk-averse, while others are thrill-seekers. Your inherent personality traits can influence your approach to investment risk. Pro Tip: When assessing your risk tolerance, consider both your willingness to take risks (emotional tolerance) and your ability to take risks (financial capacity). These two aspects don’t always align, and it’s important to find a balance between them. Types of Risk Tolerance Risk tolerance is typically categorized into three main types: Conservative: Conservative investors prioritize preserving their capital over achieving high returns. They prefer stable, low-risk investments and are willing to accept lower potential returns in exchange for greater security. These investors might allocate a larger portion of their portfolio to bonds, certificates of deposit (CDs), and other fixed-income securities. Moderate: Moderate investors seek a balance between risk and reward. They're willing to accept some market fluctuations in pursuit of higher returns but still want a level of stability in their portfolio. A moderate investor might have a mix of stocks and bonds , perhaps with a 60/40 or 50/50 split. Aggressive: Aggressive investors are comfortable with high levels of risk in pursuit of potentially higher returns. They can often tolerate significant market volatility and may have a portfolio heavily weighted towards stocks, including growth stocks and potentially even speculative investments. It's worth noting that these categories are not rigid, and many investors fall somewhere in between. Your risk tolerance might also vary for different portions of your portfolio. For example, you might be more conservative with your retirement savings but more aggressive with a separate investment account earmarked for discretionary spending. Risk Tolerance vs. Risk Capacity While often used interchangeably, risk tolerance and risk capacity are distinct concepts that both play crucial roles in shaping your investment strategy. Risk tolerance, as we’ve discussed, is your emotional and psychological ability to withstand investment losses. It’s about how you feel when your investments decline in value. Your financial circumstances, including income and net worth, significantly influence your risk capacity. Risk capacity, on the other hand, is your financial ability to endure losses. It’s determined by factors such as your investment time horizon, income, net worth, and financial goals. Risk capacity is objective and quantifiable, while risk tolerance is more subjective. Andrew Casteel, CFP® at Covenant Wealth Advisors in Reston, VA , emphasizes the importance of this distinction: “Many investors focus solely on their risk tolerance, but understanding your risk capacity is equally crucial. You might feel comfortable with high-risk investments, but if a significant loss would jeopardize your ability to meet essential financial goals, your risk capacity might be lower than your tolerance. It’s our job as advisors to help clients find the right balance.” Ideally, your investment strategy should align both your risk tolerance and risk capacity. If there’s a mismatch—for instance, if you have a high risk tolerance but a low risk capacity—it’s important to adjust your strategy accordingly to ensure you’re not taking on more risk than you can afford. How Risk Tolerance Affects Your Investment Strategy Your risk tolerance plays a pivotal role in shaping your investment plan. Here’s how: Asset Allocation: Your risk tolerance largely determines how you divide your investments among different asset classes like stocks, bonds, and cash. A higher risk tolerance might lead to a portfolio with more higher risk assets like stocks, while a lower tolerance might result in a more balanced or bond-heavy approach 1 . An aggressive investor might allocate a larger portion of their portfolio to stocks, focusing on growth and capital appreciation. Investment Selection: Within each asset class, your risk tolerance influences the specific investments you choose. For example, a risk-tolerant investor might opt for growth stocks or emerging market funds, while a more conservative investor might prefer blue-chip stocks or government bonds. Rebalancing Frequency: Your risk tolerance can affect how often you rebalance your portfolio . Investors with lower risk tolerance might rebalance more frequently to maintain their desired asset allocation, while those with higher tolerance might be comfortable with less frequent adjustments. Reaction to Market Volatility: Understanding your risk tolerance helps you prepare for and react appropriately to market fluctuations. This can prevent panic selling during downturns or excessive risk-taking during bull markets. Retirement Planning: Your risk tolerance impacts how you save and invest for retirement. It influences decisions about when to shift to more conservative investments as you approach retirement age . Pro Tip: While it’s important to invest according to your risk tolerance, don’t let it prevent you from taking necessary risks to meet your long-term financial goals. Sometimes, working with a financial advisor can help you find ways to manage your emotional response to risk while still pursuing appropriate investment strategies. Assessing Your Risk Tolerance Level Accurately assessing your risk tolerance is crucial for creating an effective investment strategy. Here are some ways to gauge your risk tolerance: Risk Tolerance Questionnaires: Many financial institutions and advisors use standardized questionnaires to assess risk tolerance. These typically include questions about your investment goals, time horizon, and how you’d react to various market scenarios. Self-Assessment: Reflect on your past behavior during market downturns. Did you panic and sell, or did you stay the course? Your actual behavior can be a good indicator of your true risk tolerance. Hypothetical Scenarios: Consider how you’d feel if your portfolio lost 10%, 20%, or 30% of its value. At what point would you feel compelled to make changes? Even better, turn those percentages into dollars. For example, if you have a $2 million portfolio, a 20% decline sounds a lot different than losing $400,000! Financial Analysis: Look at your overall financial situation, including your income, expenses, assets, and liabilities. This can help determine your risk capacity, which should be considered alongside your risk tolerance. Professional Assessment: A financial advisor can help you assess your risk tolerance more objectively and comprehensively. They can also help you understand how your risk tolerance aligns with your financial goals and risk capacity. Finally, you can develop an investing strategy that aligns with your risk tolerance and financial goals. Remember, assessing risk tolerance isn’t a one-time event. It should be revisited periodically, especially after significant life changes or major market events. Download Now: 15 Free Retirement Planning Checklists [FREE DOWNLOAD] Adjusting Your Portfolio Based on Risk Tolerance Once you’ve assessed your risk tolerance, the next step is to align your investment portfolio accordingly. Here’s how you might adjust your portfolio based on different risk tolerance levels: Conservative Risk Tolerance: Higher allocation to bonds (e.g., 25-40% stocks, 75-60% bonds) Focus on high-quality, investment-grade bonds and short-term bond maturities Diversify across U.S and foreign markets Consider removing emerging markets from your portfolio Consider including cash or cash equivalents for stability Moderate Risk Tolerance: More balanced allocation (e.g., 40-65% stocks, 60-35% bonds) Diversify across U.S and foreign markets Consider adding some alternative investments for diversification Aggressive Risk Tolerance: Higher allocation to stocks (e.g., 65-100% stocks, 35-0% bonds) Increase exposure to A rated and BBB rated bonds Include higher weights toward value and small company stocks and potentially some speculative investments, as an aggressive investor focuses on capital appreciation and is willing to endure significant market volatility Higher exposure to international and emerging markets Consider more complex investment strategies or alternative investments Remember, these are general guidelines. Your specific allocation should also consider factors like your age, financial goals, and overall financial situation. The Role of a Financial Advisor in Managing Risk While understanding your own risk tolerance is crucial, working with a financial advisor can provide valuable insights and expertise in managing investment risk. Here’s how a financial advisor, like those at our firm, Covenant Wealth Advisors, can help: Objective Assessment: Advisors can provide an unbiased assessment of your risk tolerance, often using professional tools and their experience with numerous clients. Aligning Risk and Goals: They can help ensure your risk tolerance aligns with your financial goals and risk capacity, making adjustments where necessary. Portfolio Construction: Advisors can build a diversified portfolio that matches your risk profile while still aiming to meet your financial objectives. Ongoing Management: They can monitor your portfolio and make adjustments as market conditions or your personal circumstances change. Emotional Support: During market volatility, advisors can provide perspective and help prevent emotional decisions that could harm your long-term financial health. They can help you understand the potential to risk losing money and manage your emotional response to market fluctuations. Education: Advisors can help you understand different types of investment risks and strategies for managing them effectively. FAQs Q: Can my risk tolerance change over time? A: Yes, risk tolerance can change due to factors like age, financial situation, or life experiences. It’s important to reassess your risk tolerance periodically, especially after significant life events or changes in your financial goals. Q: What if my risk tolerance doesn’t match my financial goals? A: If there’s a mismatch between your risk tolerance and financial goals, it’s crucial to find a balance. This might involve adjusting your goals, extending your time horizon, or finding investment strategies that can help you reach your goals within your comfort zone. A financial advisor can be particularly helpful in this situation. Q: How often should I reassess my risk tolerance? A: It’s generally a good idea to reassess your risk tolerance annually or whenever you experience significant life changes such as marriage, divorce, birth of a child, or approaching retirement. Major market events might also prompt a reassessment. Q: Can I have different risk tolerances for different financial goals? A: Absolutely. Your risk tolerance might vary depending on the specific goal and its time horizon. For example, you might have a higher risk tolerance for long-term retirement savings and a lower tolerance for shorter-term goals like saving for a home down payment. Q: How does risk tolerance relate to asset allocation? A: Risk tolerance is a key factor in determining your asset allocation. Generally, a higher risk tolerance allows for a higher allocation to stocks and other growth-oriented investments, while a lower risk tolerance might lead to a more conservative allocation with a higher percentage of bonds and cash equivalents. Q: Do all investments involve risk? A: Yes, all investments involve some degree of risk, which is crucial to understand for effective portfolio management. Q: What is an aggressive investor? A: An aggressive investor is someone with a high-risk tolerance who focuses on capital appreciation and is prepared to lose money in pursuit of potentially higher returns. They typically invest heavily in stocks and need to regularly assess their risk willingness and financial goals to align their investment strategy. Conclusion Understanding and accurately assessing your risk tolerance is a crucial step in creating an effective investment plan. It helps you strike the right balance between risk and potential return, allowing you to pursue your financial goals while still being able to sleep soundly at night. Remember, risk tolerance is personal and can change over time. Regular reassessment and adjustment of your investment strategy is key to ensuring your portfolio continues to align with both your risk tolerance and your financial objectives. While self-assessment can be a good starting point, working with a professional financial advisor can provide valuable insights and expertise in managing investment risk. They can help you navigate the complex interplay between risk tolerance, risk capacity, and your financial goals, ultimately helping you build a more robust and personalized investment strategy . Aligning your investing strategy with your risk tolerance and financial goals is essential for long-term success. Investing always involves some level of risk, but by understanding and respecting your risk tolerance, you can create an investment plan that works for you in both bull and bear markets. After all, the goal isn’t just to maximize returns—it’s to build a financial future that aligns with your values, goals, and peace of mind. Would you like our team to just do your retirement planning for you? Contact us today for a free retirement assessment. About the author: Mark Fonville, CFP® CEO and Senior Financial Advisor Mark is the CEO of Covenant Wealth Advisors and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule your free retirement assessment today   Disclosures:  Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Are you a high-net-worth investor with over $2 million who is concerned about maximizing your wealth and minimizing risk? If so, conducting an investment portfolio review is a crucial step towards achieving your financial goals . With the fast-paced nature of the financial markets, it's easy to lose sight of your long-term financial objectives and get caught up in short-term fluctuations. That's why it's essential to periodically assess your investment portfolio to ensure that it's well-positioned to achieve your financial goals while minimizing risk. A financial advisor at Covenant Wealth Advisors can provide a personalized investment portfolio review. Take our short quiz and be matched with an experience advisor today! In this blog, we'll discuss the 9 crucial components of an investment portfolio review that will help you optimize your portfolio for tax efficiency, assess your risk exposure, and stay disciplined in your investment decisions. Most importantly, it will provide you with a framework to identify potential gaps and blind spots in your investment game plan. So, grab a cup of coffee and join us as we dive into the world of investment portfolio reviews. Is Your Investment Portfolio On Track for Retirement ? A well-structured investment portfolio is key to a confident and secure retirement. Our firm helps you stay on track with: Comprehensive Portfolio Review – Ensure your investments align with your retirement goals, risk tolerance, and market conditions. Tax-Efficient Investing – Optimize your portfolio with strategies like Roth conversions, RMD management, and tax-efficient withdrawals. Proactive Risk Management – Protect your wealth by balancing growth and stability to navigate market fluctuations. SCHEDULE YOUR FREE ASSESSMENT What is an investment portfolio review? An investment portfolio review is an assessment of your investment portfolio to evaluate whether it's aligned with your financial goals, risk tolerance, and tax efficiency objectives. It involves analyzing your asset allocation, diversification, risk exposure, management expenses, ownership costs, and tax strategies. The primary objective of an investment portfolio review is to ensure that your portfolio is well-positioned to achieve your long-term financial goals while minimizing risk. During an investment portfolio review, you may evaluate the performance of your investments, assess the level of risk in your portfolio, and identify areas that require adjustments to achieve your financial objectives. You will also evaluate the tax efficiency of your portfolio by assessing the impact of turnover on your taxes and evaluating your portfolio's tax strategies. Investment portfolio reviews are typically conducted at least annually, but the frequency may vary depending on your financial situation and investment objectives. For example, at Covenant Wealth Advisors, we review portfolios every couple of weeks to ensure they continue to align with our client's personal situations. Regular portfolio reviews are crucial for high-net-worth investors who want to maximize their wealth, minimize risk, and optimize tax efficiency. Why is an investment portfolio review important? An investment portfolio review is important for several reasons. First, it helps you evaluate the performance of your portfolio against your financial goals and objectives. By reviewing your portfolio periodically, you can identify areas that require adjustments to achieve your long-term financial goals. Once you understand the returns you need to accomplish your goals, you can then start to build a portfolio that gives you the highest probability of accomplishing those returns without unnecessary risk. Secondly, a portfolio review helps you assess the level of risk in your portfolio. By evaluating your asset allocation, diversification, and risk exposure, you can ensure that your portfolio is well-positioned to achieve your financial objectives while minimizing risk. Thirdly, an investment review helps you assess the tax efficiency of your portfolio. Taxes can have a significant impact on investment returns, especially for high-net-worth investors. By evaluating your portfolio's tax strategies and assessing the impact of turnover on your taxes, you can optimize your portfolio for tax efficiency and improve your after-tax returns. Fourthly, an investment portfolio analysis helps you evaluate the expenses associated with managing your portfolio. By evaluating the management expenses and ownership costs of your investment holdings, you can ensure that you're paying reasonable fees for the value provided. Finally, an investment portfolio review helps you stay disciplined and focused on your long-term financial goals. Market volatility and short-term fluctuations can tempt investors to make emotional investment decisions that can harm their long-term financial prospects. By conducting regular portfolio reviews, you can maintain a long-term perspective and stay disciplined in your investment decisions. Now, let’s dive into the 9 critical components of an investment portfolio review . 1. Asset Allocation Asset allocation is the process of dividing your investment portfolio among different asset classes, such as stocks, bonds, and cash. The purpose of asset allocation is to create a diversified portfolio that balances risk and return. By diversifying your investments across different asset classes, you can reduce the impact of market volatility on your portfolio's performance. Asset class diversification means investing in different types of investments within one category. For example, in the category of stocks, you can invest in big companies, medium-sized companies, and small companies. By investing in different types of stocks, you can reduce the risk of losing money if one type of stock does not perform well. Asset Allocation Review - For Illustrative Purposes Only. Not Advice. The asset allocation that you choose will depend on your financial goals, investment time horizon, and risk tolerance. Asset allocation is a crucial component of investment portfolio management, and studies have shown that it can account for up to 90% of portfolio returns over the long term. By diversifying your investments across different asset classes, you can achieve a well-balanced portfolio that is aligned with your investment objectives and risk tolerance. 2. Global Diversification Global diversification involves investing in companies and assets outside of your home country. By investing in global markets outside of the United States, you can reduce your exposure to domestic market risk and benefit from the growth potential of developed and emerging markets. A proper portfolio analysis should help you understand what your domestic and international exposure is across your entire portfolio. International Portfolio Diversification Review - For Illustrative Purposes Only. Not Advice or a Recommendation. But, some investors may be fearful of investing outside of the United States. Perhaps you feel the same way. Home bias is the tendency for investors to invest most of their money in companies and assets that are located in their own country. This can be a threat to investors because it limits their exposure to other opportunities in different countries that may offer higher returns or lower risk. Investing only in your own country can be risky because your investment returns may be closely tied to the performance of your country's economy. If your country's economy is not doing well, your investments may suffer. Diversifying your investments across different countries can help reduce this risk and potentially provide higher returns. In addition, investing in only one country can also limit your exposure to companies and assets in other countries that may offer unique growth opportunities or may be less affected by market volatility. For example, in the chart below we provide the returns of US. stock markets (S&P 500) vs non-U.S. developed markets (EAFE) and Emerging Markets (EM) over a period of time. Index return data only. Indexes are not available for investment and contain no fees or expenses. As you can see, market returns differ depending upon the year. It's important for investors to consider diversifying your investments across different countries and not only invest in their own country. While there is no guarantee, this can help reduce risk and potentially provide higher returns over the long-term. As part of your portfolio review, you should evaluate your exposure to global markets and consider whether your current allocation is consistent with your risk tolerance and investment objectives. 3. Stock Concentration Risk Stock concentration risk is when you have too much of your money invested in just one company's stock or a small group of companies' stocks. This can be risky because if that company or group of companies don't do well, you could lose a lot of money. For example, if you have a lot of your money invested in just one technology company and that company doesn't do well, the value of your investment could go down a lot and you could lose a lot of money. Here's what a stock concentration risk analysis may looks like: Concentration portfolio risk review - For Illustrative Purposes Only. Not Advice. There have been many well-known companies that have filed for bankruptcy in the past. Here are a few examples: Enron - In 2001, Enron, an energy company, filed for bankruptcy after it was discovered that the company had engaged in accounting fraud. Lehman Brothers - In 2008, Lehman Brothers, a global financial services firm, filed for bankruptcy as a result of the subprime mortgage crisis. Toys "R" Us - In 2018, Toys "R" Us, a popular toy retailer, filed for bankruptcy due to declining sales and increased competition from online retailers. Kodak - In 2012, Kodak, a well-known photography company, filed for bankruptcy due to a decline in demand for its film products and its failure to successfully transition to digital photography. Sears - In 2018, Sears, a department store chain, filed for bankruptcy after years of declining sales and increased competition from online retailers. These examples show that even large and well-known companies can face financial difficulties and may not be immune to bankruptcy. It's important for investors to carefully evaluate the financial health and stability of companies before investing in them. The truth is that bankruptcies happen all of the time as illustrated in the chart below: Source: SPGlobal It's important to have a diversified portfolio, which means investing in different types of companies and industries, to help reduce the risk of losing a lot of money if one company or sector does poorly. Sometimes, you may own holdings, such as mutual funds that have the exposure to the same stocks. As a result, your portfolio may have increased exposure to a single stock without your knowledge. As part of your portfolio review, you should evaluate your exposure to individual stocks and sectors and consider diversifying your holdings to reduce concentration risk. 4. Equity Factor Analysis Popularized by Nobel Prize winning economist, Eugene Fama and Professor Kenneth French, equity factor exposure refers to how much a stock or investment is affected by certain characteristics or factors, such as the size of the company, the value of the company, or how profitable the company is. The multi-factor model of investing by Fama and French suggests that the performance of stocks is not just affected by the overall market, but also by other factors such as company size, value, and profitability. These factors are important to consider when building an investment portfolio because they can affect the risk and return of investments. By diversifying across different factors, investors can potentially achieve higher returns while managing their risk exposure. Get a Free Investment Portfolio Review: Tying your $1 million+ portfolio to your life plan can be overwhelming. Don't make costly mistakes with your hard earned wealth. Contact Covenant Wealth Advisors today for a free portfolio checkup and review. For example, here is a sample equity factor analysis for an investment portfolio. The red triangle denotes the hypothetical investor's current portfolio (slightly tilted toward large and growth companies). The green circle denotes the hypothetical recommended portfolio that includes tilting the stock portfolio toward more small and value companies. Equity factor portfolio analysis - For Illustrative Purposes Only. Not Advice. Your investment portfolio review should help you understand how much or how little exposure you have toward these factors. Understanding your factor exposure can help you understand how to potentially improve expected returns going forward. But, why should you consider tilting your stock portfolio toward factors in the first place? Exposure to Value Companies Value companies are companies that are undervalued relative to their peers. Value stocks tend to outperform growth stocks over the long term, but they can be more volatile in the short term. As part of your portfolio review, you should evaluate your exposure to value stocks and consider whether your current allocation is consistent with your investment objectives. Exposure to Small Companies Small companies are companies with a market capitalization of less than $2 billion. Small-cap stocks tend to be more volatile than large-cap stocks but offer higher growth potential over the long term. As part of your portfolio review, you should evaluate your exposure to small-cap stocks and consider whether your current allocation is consistent with your investment objectives. Exposure to Companies with High Profitability Companies with high profitability tend to generate consistent earnings and have a lower risk of bankruptcy. As part of your portfolio review, you should evaluate your exposure to companies with high profitability and consider whether your current allocation is consistent with your investment objectives. As you can see, it's important to understand how much exposure you have in your investment portfolio to different factors. Be sure to include a factor analysis in your investment portfolio review. 5. Fixed Income Quality At Covenant, we view bonds as an important component of building investment portfolios. In our view, they should be used primarily to reduce risk in a portfolio and provide a source of liquidity for cash needs or income. But, different types of bonds have different levels of risk. Bonds are rated based on their credit quality, which refers to how likely it is that the borrower will be able to pay back the money they borrowed. This rating is assigned by credit rating agencies such as Moody's and Standard & Poor's. The rating is usually represented by a letter grade, such as "AAA," which is the highest rating, or "D," which is the lowest rating. Bonds with a higher rating are considered less risky because the borrower is more likely to be able to pay back the money they borrowed. Bonds with a lower rating are considered more risky because there is a higher chance that the borrower may not be able to pay back the money. When investors are looking to buy bonds, they may consider the credit rating to help them determine how risky the investment is. Fixed income credit quality analysis. - For illustrative purposes only. Not advice. Bonds with higher ratings may have lower returns, while bonds with lower ratings may have higher returns, but also higher risk. It's important to carefully consider the credit rating and other factors when making investment decisions. As part of your portfolio review, you should evaluate the quality of your fixed income holdings and consider whether your current allocation is consistent with your risk tolerance and investment objectives. 6. Fixed Income Maturity Fixed income maturity refers to the length of time until the bond's principal is repaid. Bonds with longer maturities tend to offer higher yields but are more sensitive to changes in interest rates. Bonds with shorter term maturities are less sensitive to movements in interest rates. Here is an example of a fixed income maturity analysis: Fixed Income Maturity Analysis Review - For illustrative purposes only. Not advice. A large increase in interest rates is the primary reason that bond prices declined substantially in 2022! As part of your portfolio review, you should evaluate the maturity of your fixed income holdings and consider how movements of interest rates may impact your holdings. 7. Investment Costs Investment costs are the expenses that investors pay for buying, holding, and selling investments. These costs can include fees, commissions, and other expenses related to managing and maintaining an investment portfolio. Some examples of investment costs include brokerage commissions for buying and selling stocks, mutual fund fees, account maintenance fees, and advisor fees. These costs can vary depending on the type of investment and the investment firm you are working with. Get a Free Investment Portfolio Review: Tying your $1 million+ portfolio to your life plan can be overwhelming. Don't make costly mistakes with your hard earned wealth. Contact Covenant Wealth Advisors today for a free portfolio checkup and review. Investment costs are an important consideration for investors because they can impact the overall return on investment. High investment costs can reduce the return on investment, while lower investment costs can increase the return on investment. Mutual fund and ETF expense ratios When you invest in a mutual fund or exchange traded fund (ETF), you pay a fee for the professionals who manage the fund and make investment decisions. This fee is called the expense ratio, and it is expressed as a percentage of the total amount of money invested in the fund. Expense ratios are important because they impact the overall return on investment. A high expense ratio means that a larger portion of your investment is going towards paying fees, which can lower your overall returns. Conversely, a low expense ratio means that more of your investment is going towards buying assets, which can increase your overall returns. It's important to carefully consider the expense ratio when choosing a mutual fund or ETF to invest in. Cost of Turnover The cost of turnover in a stock portfolio is the expense of buying and selling stocks within the portfolio. When stocks are bought and sold frequently, the cost of turnover can add up quickly and impact the overall return on investment. One factor that can impact the cost of turnover is the bid-ask spread. The bid-ask spread is the difference between the price at which a buyer is willing to buy a stock (the bid price) and the price at which a seller is willing to sell the stock (the ask price). The bid-ask spread represents the cost of executing a trade and can impact trading costs. For example, if the bid price for a stock is $10 and the ask price is $11, the bid-ask spread is $1. If an investor wants to buy the stock, they will have to pay the ask price of $11, which is higher than the bid price. This difference in price represents the cost of executing the trade, and can impact the overall return on investment. According to academic studies, the added cost of turnover in an investment portfolio can vary depending on several factors, such as the frequency of trading, the type of assets traded, and the size of the portfolio. Get a Free Investment Portfolio Review: Tying your $1 million+ portfolio to your life plan can be overwhelming. Don't make costly mistakes with your hard earned wealth. Contact Covenant Wealth Advisors today for a free portfolio checkup and review. Some studies have suggested that the cost of turnover can range from as low as 0.1% to as high as 2% or more per year, depending on these factors. In general, higher turnover rates tend to result in higher trading costs and lower returns over the long term. Here are a few examples of academic studies that have examined the impact of turnover on investment costs: "Turnover and Mutual Fund Performance" by Mark Carhart (1997) - This study found that mutual funds with higher turnover rates tended to have higher expenses and lower returns. "Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors" by Brad M. Barber and Terrance Odean (2000) - This study found that individual investors who traded frequently tended to have lower returns due to higher trading costs and other factors. "Portfolio Turnover and Equity Trading Costs" by Robert M. Dammon, Chester S. Spatt, and Harold H. Zhang (2004) - This study found that higher portfolio turnover rates tended to result in higher trading costs, which can impact investment returns over time. "The Costs of Mutual Fund Turnover" by Ari Levine and Yao Lu (2010) - This study found that higher mutual fund turnover rates tended to result in higher expenses and lower returns for investors. When reviewing your investments, your portfolio analysis review should include an evaluation of all current expenses and suggestions for potential investments that may help reduce total cost of ownership. 8. Tax Efficiency Tax efficiency is an important consideration for high-net-worth investors, as taxes can have a significant impact on investment returns. As part of your portfolio review, you should assess the impact of turnover on your taxes and evaluate your portfolio's tax strategies, such as tax-loss harvesting, tax-efficient fund selection, and the specific location of your investments across different types of accounts. Studies have shown that tax-efficient investing can significantly improve after-tax returns for investors. The exact amount of improvement can vary depending on several factors, such as the investor's tax bracket, the type of investments held, and the overall investment strategy. One study conducted by Vanguard found that tax-efficient investing can improve after-tax returns by as much as 2% per year, compared to a less tax-efficient approach. 9. Risk Tolerance Assessment Every investor wants great returns. But stock markets don’t always go up. If you can’t tolerate the tough periods, then you may bail on your investment plan at exactly the worst time. As a result, you won’t be around when markets potentially rebound. A personal risk tolerance assessment is a tool that helps investors determine their individual comfort level with investment risk. It typically involves a series of questions or a questionnaire designed to gauge an investor's willingness to take on risk in pursuit of potential returns. The assessment considers factors such as the investor's age, financial goals, investment experience, and other personal factors that may impact their willingness to take on risk. Based on the answers provided, the assessment assigns a risk tolerance level, which can help guide investment decisions. Get a Free Investment Portfolio Review: Tying your $1 million+ portfolio to your life plan can be overwhelming. Don't make costly mistakes with your hard earned wealth. Contact Covenant Wealth Advisors today for a free portfolio checkup and review. Knowing your personal risk tolerance is important when building an investment portfolio because it can help you choose investments that align with your goals and comfort level. By selecting investments that match your risk tolerance, you can potentially achieve your financial objectives while minimizing the likelihood of significant losses due to market volatility. It's important to note that risk tolerance assessments are just one tool to consider when making investment decisions. Other factors, such as investment goals, time horizon, and financial situation should also be taken into account when determining the appropriate investment strategy. As part of your portfolio review, you should evaluate whether your actual portfolio risk is consistent with your risk tolerance. If your actual risk is higher than your risk tolerance, you may need to adjust your asset allocation or diversify your holdings to reduce risk. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Conducting an investment portfolio review is an essential component of managing your investment portfolio. By evaluating your asset allocation, diversification, risk exposure, management expenses, ownership costs, and tax strategies, you can improve the likelihood that your portfolio is well-positioned to achieve your long-term financial goals while minimizing risk. As a high-net-worth investor, optimizing your portfolio for tax efficiency is critical to achieving your financial objectives. By considering the 11 components discussed in this blog, you can move several steps closer to ensuring that your investment portfolio is optimized for tax efficiency and aligned with your financial goals and risk tolerance. So, where do you start? We can help simplify the entire investment portfolio review process for you. At Covenant Wealth Advisors, we specialize in analyzing investment portfolios and helping high-net-worth individuals manage their wealth for a more secure financial future. If you have over $1 million in savings and investments (excluding real estate), click here to request a free retirement assessment from one of our CERTIFIED FINANCIAL PLANNER ™ professionals. You’ll be glad you did! About the author: Mark Fonville, CFP® CEO and Senior Financial Advisor Mark is the CEO of Covenant Wealth Advisors  and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule your free retirement assessment today   Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss.

Imagine watching your retirement portfolio drop by 30% during a market downturn, unsure whether your financial future remains secure. What would you do? Buy? Sell? Stop spending? This scenario became reality for many investors during the 2022 market correction , highlighting why the role of a wealth manager extends far beyond just investing money. Download Free: 15 Free Retirement Planning Checklists [New for 2025] Understanding the role of a wealth manager has never been more critical as today's financial landscape grows increasingly complex. From navigating market volatility to managing tax implications and planning for generational wealth transfer, the expertise provided by these professionals can make the difference between financial uncertainty and confidence in your future. The truth is, many smart and financial savvy investors work with a wealth manager. Why? Because they are smart enough to realize that they aren't experts in everything, they understand that experience matters, and they value their time. Whether you're approaching retirement or already enjoying fun in the sun, having a trusted wealth manager by your side can help you navigate life's financial complexities while protecting and growing your hard-earned assets. Key Takeaways Wealth managers provide comprehensive financial planning that goes beyond basic investment management, including tax strategy , estate planning, and risk management. The best wealth managers take a holistic approach, considering your entire financial picture rather than just managing investments. Regular meetings and proactive communication with your wealth manager help ensure your financial strategy stays aligned with your changing life circumstances. A wealth manager can help coordinate with other financial professionals like CPAs and estate attorneys to optimize your overall financial strategy. Understanding fees and compensation structures is crucial when selecting a wealth manager to ensure transparency and alignment of interests. Table of Contents What is a Wealth Manager? Core Services Provided by Wealth Managers How Wealth Managers Differ from Other Financial Advisors Case Study: A Wealth Management Success Story The Process of Working with a Wealth Manager Selecting the Right Wealth Manager FAQs Conclusion See How Our Firm Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more...   What is a Wealth Manager? A wealth manager serves as your personal financial quarterback, coordinating various aspects of your financial life to help you build and maintain long-term wealth. These professionals typically work with high-net-worth individuals with over $2 million who have complex financial needs requiring sophisticated solutions. Selecting a wealth management team with credentials such as the CERTIFIED FINANCIAL PLANNER ® designation (CFP ® ) or Chartered Financial Analyst (CFA) is crucial, as these designations ensure the advisor and/or his team has the necessary expertise and experience to meet your financial needs effectively. Additionally, verifying the wealth manager through the Financial Industry Regulatory Authority's (FINRA) Broker Check ensures that the wealth manager is registered with relevant regulatory bodies, which is critical for compliance and trust in the financial industry. “The role of a wealth manager is to serve as a trusted advisor who understands not just your investments, but your entire financial picture - including your goals, fears, and family dynamics,” explains Mark Fonville, CFP® at Covenant Wealth Advisors, a wealth management firm in Virginia . “We’re here to help clients make informed decisions that align with their long-term objectives while navigating the complexities of today’s financial markets.” Pro Tip:  When evaluating wealth managers, look for those who take time to understand your personal goals before discussing specific investment strategies or products. Starting with an investment strategy is no different than a doctor staring with a recommended surgery. Both can leave you worse off than where you started. Core Services Provided by Wealth Managers Investment Management Wealth managers develop and implement sophisticated investment strategies tailored to your specific goals, risk tolerance, and time horizon. This includes: Portfolio construction and regular rebalancing Risk management and diversification Tax-efficient investment strategies Alternative investment opportunities when appropriate Retirement Income Planning Let's face it - figuring out how to turn life savings into reliable retirement income can feel like trying to solve a Rubik's cube blindfolded! That's where your wealth manager comes in, creating a retirement paycheck that helps you sleep well at night. A solid retirement income plan typically includes: Stress testing the probability of successfully enjoying your life in retirement without running out of money. ( See: How A Monte Carlo Analysis Can Help With Your Retirement Income Projection ) Designing your very own "retirement paycheck" - regular monthly deposits that feel just like your working years. Building in safety nets for unexpected expenses (because life has a funny way of surprising us!) Optimizing Social Security claiming strategies - timing really is everything here. Setting up a "bucket strategy" to protect against market downturns while keeping your money growing Tax Planning and Optimization Working in coordination with your CPA, we believe the best wealth managers help implement tax-efficient strategies such as: Tax-loss harvesting Strategic Roth conversion  planning Charitable giving strategies Tax-efficient withdrawal strategies in retirement Tax-managed concentrated stock diversification Tax return analysis to help reduce federal and state taxes Tax planning can be one of the most powerful tools for a wealth manager. Unfortunately, wealth managers at major brokerage firms often aren't allowed to do any tax planning! Estate Planning Coordination Your wealth manager collaborates with estate planning attorneys to help ensure your wealth transfer goals are met through: Legacy planning strategies Trust planning and implementation Charitable giving solutions Family wealth education and communication Titling accounts correctly and assigning proper beneficiaries Risk Management and Insurance Protecting your wealth is just as important as growing it. Wealth managers help identify and address potential risks through: Insurance needs analysis Long-term care planning Asset protection strategies Business succession planning if applicable How Wealth Managers Differ from Other Financial Advisors While many financial professionals offer investment advice, we believe the best wealth managers provide a more comprehensive and sophisticated level of service. Their holistic approach considers how different financial decisions impact your overall wealth picture. While financial planners address a wider range of everyday financial needs, wealth managers focus on more comprehensive services for high-net-worth individuals. “The difference lies in the depth and breadth of services provided,” notes Scott Hurt, CFP®, CPA at Covenant Wealth Advisors. “A wealth manager doesn’t just manage investments - we coordinate with other professionals, anticipate potential challenges, and proactively identify opportunities to enhance our clients’ financial lives.” Pro Tip:  Consider working with a wealth manager who also incorporates tax planning. This indicates a commitment to a higher level of standard when it comes to managing your investment portfolio. Ask yourself, how can my advisor manage my money if they don't also fully understand my tax situation? Case Study: A Wealth Management Success Story Meet Tom and Sarah Johnson, a hypothetical couple who came to us with concerns that might sound familiar. At ages 62 and 61, they had built up a nest egg of $2.8 million through years of hard work and disciplined saving. While this was certainly a healthy sum, they weren’t sure if it was enough to support their retirement dreams. We worked with them to develop comprehensive financial plans tailored to their unique financial situation and goals, ensuring they could achieve both their short and long-term objectives. Their Challenges: Uncertain if their $2.8 million portfolio would last through retirement Worried about tax implications of retirement account withdrawals Wanted to determine if a Roth conversion strategy made sense Confused about when to claim Social Security benefits Unsure about the best way to give to their church/charity Wanted to travel and spend time with family without financial stress Needed help determining the optimal retirement withdrawal strategy The Wealth Management Solution Working with our team at Covenant Wealth Advisors, we developed a comprehensive strategy that addressed each of their concerns: Retirement Income Planning : Created a tax-efficient withdrawal strategy using multiple account types Developed a Social Security claiming strategy that maximized their lifetime benefits. Established a "bucket strategy" to protect against market volatility. Tax Optimization: Implemented strategic Roth conversions before RMDs kicked in Created a tax-efficient investment portfolio . Analyzed tax return to identify additional federal and state tax deductions/credits. Investment Management: Designed an implementation plan to migrate their portfolio to a more optimal portfolio over time. Built a diversified portfolio aligned with their risk tolerance. Implemented dividend-focused strategies for reliable income. Legacy Planning: Updated estate documents in coordination with attorney to reflect their wishes. Structured accounts to minimize taxes for their beneficiaries. Created a gifting strategy for grandchildren's education. The Result Today, Tom and Sarah are enjoying their retirement with confidence. They've taken three major trips in the past year, spend regular time with their grandchildren, and most importantly, sleep well at night knowing their financial future is secure. Their portfolio is structured to provide reliable income while still growing to combat inflation, and they have a clear understanding of how much they can safely spend each month. Pro Tip:  The earlier you start working with a wealth manager before retirement, the more opportunities there might be to optimize your financial situation through strategies like asset location strategy and building different wealth buckets to help better manage taxes in the future. The Process of Working with a Wealth Manager An important component of your experience with an advisor, is the process they actually follow to provide you great advice. We've found that the best wealth managers clearly articulate their client experience. You should know exactly what to expect and when. For example, at our firm, we follow the process below: Intro Meeting - Initial Conversation The first steps is to meet virtually via phone or zoom video or in person depending upon your location. During the intro call, we will get a high level understanding of your your family background, finances, goals and concerns. Specifically, we may discuss any of the following: Your family history and career. Specific concerns or pain points with your finances. Short and long-term goals. Think retirement, travel, charity, new home, helping kids or grandkids, etc... Current financial situation Investment preferences and investment experience Family dynamics and legacy wishes We will also answer your questions about our team, process, and pricing. By the end of the intro call, we should both have enough information to know if it makes sense to continue with a free assessment . Discovery During the discovery phase, we’ll collect physical data including the following: Most recent tax return Investment statements: 401(k), IRAs, Roth, Trust, brokerage accounts Insurance coverage Cash flow/monthly expenses Debt/mortgage statements Income sources: Social security, pensions, rental, etc... Develop Your Wealth Management Strategy About two to three weeks later, we will meet for the strategy meeting. This is where you’ll see the results of your initial plan and we’ll answer questions like: When can I retire? When should I take social security? Will I be able to maintain my lifestyle in retirement? What should I do not to prepare for retirement? Believe it or not, this is a fun and interactive conversation where you will be able to visualize your financial life going forward and what needs to happen to get you there. For our process, the discovery and strategy phase are at no cost to you. This allows both of us adequate time to learn more about each other to determine if it makes sense for us to be your wealth manager. Implementation and Monitoring Should you decide to move forward, the next step is to implement your plan. This is when we will establish accounts, transfer your assets to your new accounts at an independent custodian such as Charles Schwab or Fidelity, implement your portfolio, and provide you access to your new client portal. The final step is to schedule our regular reviews where we will proactively reach out to meet with you twice a year. Through our wealth management process, you will enjoy continuous planning to keep you on track and monitor your progress, tax planning to reduce your taxes over time, and investment management to help you grow, preserve, and utilize your savings and investments over time. Like I side earlier, every advisor will have a different process. The most important component is that they have a well oiled process that has been refined over time. After all, you want a great experience. Selecting the Right Wealth Manager Key Factors to Consider Credentials and experience Fee structure and transparency Investment philosophy Communication style and frequency Available services and resources Questions to Ask Potential Wealth Managers What is your approach to wealth management? How do you get paid? What types of clients do you typically work with? How often will we meet and communicate? What resources do you have available to serve clients? FAQs How much money do I need to work with a wealth manager? Most wealth managers have minimum investment requirements ranging from $500,000 to several million dollars, depending on the firm. At Covenant Wealth Advisors, we typically work with clients who have $1 million or more in investable assets. These clients often include high-net-worth and ultra-high-net-worth individuals who require specialized financial services tailored to their unique needs. How often should I meet with my wealth manager? Most clients meet with their wealth manager quarterly, with additional meetings as needed for specific planning opportunities or concerns. Regular communication helps ensure your strategy stays aligned with your changing needs and market conditions. What fees do wealth managers typically charge? Wealth management fees  usually range from 0.50% to 1.50% of assets under management annually, depending on portfolio size and services provided. Some managers may charge additional fees for specific services or planning projects. How do I know if I need a wealth manager? Consider working with a wealth manager if you have complex financial needs, significant assets to protect and grow, or want comprehensive financial planning that goes beyond basic investment management. Conclusion The role of a wealth manager extends far beyond traditional investment advice, encompassing comprehensive financial planning, tax strategy, estate planning, and risk management. By serving as your personal financial quarterback, a qualified wealth manager can help you navigate complex financial decisions while working to protect and grow your wealth for generations to come. The wealth management industry is experiencing significant growth and evolving dynamics, driven by trends such as digital transformation, client-centric approaches, and low cost investing via ETFs. As financial markets and regulations continue to evolve, having a trusted wealth manager by your side becomes increasingly valuable. They can help you adapt to changing conditions while keeping your long-term financial goals in focus. Would you like to see how our team of wealth managers can help you and your family? Contact us today for a free retirement roadmap experience. About the author: Adam Smith, CFP® Senior Financial Advisor Adam is a Senior Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 17 years of experience in the financial services industry in the areas of financial planning for retirement, tax planning, and investment management. Schedule your free retirement assessment today   Disclosures:  Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Picture a friend meeting you for lunch, visibly worried. Your friend Sarah, a successful business owner in her mid-50s, had just lost her sister unexpectedly. Beyond the emotional toll, Sarah witnessed firsthand the challenges her sister’s family faced without proper estate planning  in place. This wake-up call prompted her to take action, realizing that protecting her own legacy wasn’t just about herself – it was about providing certainty and care for her loved ones. Estate planning essentials form the foundation of a secure financial future, yet nearly 76% of Americans don’t have a basic will in place . Download Free: 15 Free Retirement Planning Cheat Sheets [New for 2025] This oversight can lead to unnecessary stress, financial complications, and family disputes during already difficult times. Introducing an estate planning checklist can simplify the process by outlining the essential legal documents necessary for effective estate planning. It ensures that individuals can organize their affairs and have their wishes honored upon their passing. Every year at Covenant Wealth Advisors , we guide clients through the intricacies of estate planning, helping them create comprehensive strategies that align with their values and protect their hard-earned assets. The peace of mind that comes from having a solid estate plan in place is invaluable. Key Takeaways A comprehensive estate plan involves more than just a will – it includes trusts , healthcare directives, and power of attorney documents Regular review and updates of estate planning documents are crucial, especially after major life events Strategic tax planning within your estate can help maximize the legacy you leave to your beneficiaries Healthcare directives and power of attorney documents are essential for protecting your wishes during incapacity Working with qualified professionals ensures your estate plan aligns with current laws and regulations Consulting financial advisors for tailored guidance in estate planning can help ensure your strategies are suitable for your individual circumstances Table of Contents Understanding the Basics of Estate Planning Essential Estate Planning Documents Tax Considerations in Estate Planning Healthcare Directives and Power of Attorney Trust Strategies for Asset Protection Common Estate Planning Mistakes to Avoid When to Update Your Estate Plan FAQs Conclusion See How Our Firm Can Help You Retire With Confidence Retirement Planning  - Find when you can retire and if you'll be able to maintain your lifestyle. Investment Management  - Personalized investing to grow and protect your wealth in retirement. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Understanding the Basics of Estate Planning Estate planning is a comprehensive approach to managing and distributing your assets while ensuring your healthcare wishes are honored. It's about making informed decisions today that will impact your legacy tomorrow. "Estate planning isn't just for the ultra-wealthy," explains Andrew Casteel, CFP® at Covenant Wealth Advisors in Reston, VA . "It's about ensuring your hard-earned assets are protected and distributed according to your wishes, while minimizing potential tax implications and family disputes." The Foundation: Wills and Trusts A will serves as the cornerstone of your estate plan, providing clear instructions about asset distribution and guardian designation for minor children. However, many high-net-worth  individuals benefit from incorporating trusts into their strategy. 💡 Pro Tip: Consider using a pour-over will in conjunction with a revocable living trust to ensure privacy and avoid probate for your estate. Essential Estate Planning Documents Beyond a basic will, several crucial legal documents form a comprehensive estate plan: Last Will and Testament Revocable Living Trust Durable Power of Attorney Healthcare Power of Attorney Living Will HIPAA Authorization Form Insurance Policies “One of the biggest mistakes we see is when clients focus solely on asset distribution while overlooking important healthcare and financial management decisions,” notes Scott Hurt, CFP®, CPA at Covenant Wealth Advisors' Richmond, Virginia location . Protecting Your Family Members Advance Healthcare Directive (AHCD) / Living Will When it comes to estate planning, protecting your family members is paramount. One essential document that ensures your medical wishes are honored is the Advance Healthcare Directive (AHCD), also known as a Living Will. An AHCD/Living Will is a legal document that outlines your preferences for medical care if you become unable to communicate them yourself. This document is crucial for guiding your family members and healthcare providers in making decisions that align with your values and wishes. By creating an AHCD/Living Will, you can: Relieve Your Family Members : Spare your loved ones from the emotional burden of making difficult medical decisions on your behalf. Prevent Family Conflicts : Clearly outline your medical care preferences to avoid disagreements among family members. Ensure Your Wishes Are Respected : Guarantee that your choices regarding life-sustaining treatments, pain management, and other medical decisions are followed. Provide Peace of Mind : Offer reassurance to yourself and your loved ones that your healthcare decisions are pre-determined and respected. It’s important to note that an AHCD/Living Will is distinct from a financial power of attorney. While a financial power of attorney authorizes someone to manage your financial affairs, an AHCD/Living Will specifically addresses your medical care decisions. By having both documents in place, you ensure comprehensive protection for both your financial and healthcare needs. Tax Considerations in Estate Planning Understanding and planning for potential tax implications is crucial for preserving your wealth for future generations. The current federal estate tax exemption stands at $13.99 million per individual (2025), but state-level estate taxes may apply at lower thresholds. It is essential to consult a qualified tax advisor to receive tailored tax planning advice , especially when dealing with estate planning and charitable giving. Strategic Tax Planning Approaches Lifetime gifting strategies Charitable giving techniques Trust structures for tax efficiency Business succession planning 💡 Pro Tip: Consider using an Intentionally Defective Grantor Trust (IDGT) to transfer appreciating assets out of your estate while maintaining income tax responsibility. Healthcare Directives and Power of Attorney Ensuring your healthcare wishes are respected requires proper documentation and clear communication with your loved ones. Key Components: Think of these healthcare documents as your voice when you might not be able to speak for yourself. Here's what each one does for you: Living Will : This document is your healthcare game plan. It spells out your wishes for end-of-life medical care, like whether you want life support or feeding tubes. It's like leaving instructions for your favorite recipe – you're making sure everything is done just the way you want it. Healthcare Power of Attorney : This is picking your healthcare MVP – someone you trust to make medical decisions if you can't. They become your voice in the doctor's office, armed with knowledge of your wishes and values. HIPAA Authorization : Think of this as your medical information's VIP pass. It lets your chosen people access your health records and talk to your doctors. Without it, even close family members might be left in the dark about your condition. Mental Healthcare Power of Attorney : This is your backup quarterback for mental health decisions. If you're unable to make sound decisions about your mental healthcare, this person steps in to ensure you get the care you need. Trust Strategies for Asset Protection Let's break down these trust options in a way that makes sense for your planning needs: Revocable Living Trust : Think of this as your financial command center that you can adjust anytime. It helps your loved ones avoid the time and expense of probate court while keeping your affairs private. You maintain full control during your lifetime, and can move assets in and out like furniture in your home. Irrevocable Life Insurance Trust (ILIT) : This trust is like a protective vault for your life insurance policy. By keeping the policy outside your estate, you help your beneficiaries avoid estate taxes  on the death benefit. Once it's set up, it's like putting your insurance policy in a lockbox – you can't take it back, but that's exactly what makes it work its tax-saving magic. Qualified Personal Residence Trust (QPRT) : This clever trust lets you give your home to your children while still living there. It's like telling your kids, "This house will be yours in 15 years, but mom and dad are keeping the guest room!" It can significantly reduce the gift tax value of your home transfer. Charitable Remainder Trust (CRT) : Here's a way to support your favorite causes while maintaining an income stream. You put in appreciated assets, get an immediate tax deduction, and receive regular payments. It's like planting a tree that provides both shade for others and fruit for you. Generation-Skipping Trust : This trust helps you pass assets directly to grandchildren or later generations while minimizing estate taxes along the way. Think of it as an express elevator that bypasses a floor in a tall building – in this case, bypassing a generation of estate taxes. Implementing Your Estate Plan Choosing the Right Executor or Trustee Implementing your estate plan effectively requires careful selection of the right executor or trustee. This individual will be responsible for managing your estate and ensuring that your wishes are carried out as outlined in your estate planning documents. An executor or trustee plays a critical role in: Managing Financial Assets : Overseeing your bank accounts, retirement accounts , and investment accounts to ensure they are handled according to your instructions. Distributing Assets : Ensuring that your financial assets are distributed to your beneficiaries as specified in your estate plan. Handling Taxes and Expenses : Paying any outstanding taxes and expenses to settle your estate. Making Medical Decisions : If you have an AHCD/Living Will, your executor or trustee may also be involved in making medical decisions on your behalf. When choosing an executor or trustee, consider the following factors: Trustworthiness : Select someone you trust implicitly to carry out your wishes and manage your estate responsibly. Financial Acumen : Ensure the person has the necessary financial knowledge and experience to handle your financial accounts and assets effectively. Availability : Choose someone who is available and willing to take on the responsibilities of being an executor or trustee. Conflict of Interest : Avoid selecting someone with potential conflicts of interest that could impact their ability to make decisions in your best interest. By carefully choosing the right executor or trustee, you can ensure that your estate plan is implemented smoothly, your financial assets are managed wisely, and your wishes are respected. This thoughtful selection is a crucial step in protecting your legacy and providing peace of mind for your family members. Common Estate Planning Mistakes to Avoid Failing to update beneficiary  designations Overlooking digital assets Not planning for state estate taxes Improper trust funding Neglecting to update documents after major life events When to Update Your Estate Plan Review your estate plan regularly, particularly after: Marriage or divorce Birth or adoption of children Purchase or sale of significant assets Changes in tax laws Retirement Moving to a new state FAQs Q: How often should I review my estate plan?  A: While annual reviews are recommended, you should definitely review your estate plan every 3-5 years or after any major life event. This ensures your plan remains aligned with your current situation and wishes. Q: Do I need both a will and a trust?  A: For many individuals with substantial assets, having both a will and trust provides comprehensive protection. A trust can help avoid probate and provide privacy, while a will ensures any assets not in the trust are properly distributed. Q: How can I minimize estate taxes?  A: Strategic gifting, trust structures, and charitable giving can help reduce estate tax exposure. Working with qualified professionals is essential for developing an effective tax minimization strategy . Conclusion Estate planning essentials form the backbone of a secure financial legacy. While the process may seem daunting, taking action today ensures your wishes are honored and your loved ones are protected tomorrow. Remember that estate planning is not a one-time event but an ongoing process that should evolve with your life circumstances. Taking the time to create and maintain a comprehensive estate plan demonstrates foresight and care for your family's future. By addressing both financial and healthcare aspects of estate planning, you provide a roadmap for your loved ones to follow during challenging times. Would you like our team to just do your retirement planning for you? Contact us today for a free retirement assessment. About the author: Matt Brennan, CFP® Senior Financial Advisor Matt is a Senior Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 20 years of experience in the financial services industry in the areas of financial planning for retirement, tax planning, and investment management. Schedule your free retirement assessment today   Disclosures:  Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Welcome to your ultimate guide on Fidelity 401k rollovers. Making the right financial move can seem daunting, especially when it comes to retirement savings. But fear not, because in this article, we have everything you need to know about Fidelity 401k rollovers. If you're considering switching jobs or retiring, rolling over your 401k into a Fidelity account can offer you valuable advantages. By learning the ins and outs of this process, you can make informed decisions that will shape your financial future. But, if you need personalized advice around retirement, you should consider talking to a financial advisor who specializes in retirement income, tax and investment planning. Download Free: Should I Rollover My Dormant 401(k)? [New for 2025] In this guide, we'll dive deep into the benefits of a Fidelity 401k rollover, the steps involved, potential tax implications, and the key factors to consider before making the move. Whether you're a seasoned investor or just starting to build your retirement plan, this article is packed with invaluable insights to help you navigate the process. Join us as we unravel the complexities of Fidelity 401k rollovers and empower you to take control of your financial destiny. It's time to make the right choice for your retirement savings. Let's get started. Key Takeaways Consolidate Retirement Accounts : A Fidelity 401k rollover lets you merge multiple retirement accounts into a single IRA for streamlined management and easier tracking of progress toward retirement goals. Broad Investment Choices : With Fidelity, you gain access to a diverse range of investment options, including mutual funds, ETFs, stocks, and bonds, allowing customization based on your risk tolerance and objectives. Low-Cost Fees : Fidelity offers some of the lowest fees in the industry, helping you retain more of your investment returns over the long term. Tax Implications to Consider : Traditional rollovers are tax-free if completed within 60 days, while rolling into a Roth IRA triggers taxes upfront but offers tax-free growth later. Avoid Common Mistakes : Missing rollover deadlines, ignoring after-tax contributions, or failing to consider employer stock strategies can lead to unnecessary taxes or missed opportunities. Expert Advice for Complex Scenarios : Working with an independent financial advisor, especially for investors with over $1 million, can provide more comprehensive retirement income, tax, and investment planning strategies beyond what Fidelity offers. Custom Strategies for Retirement : Covenant Wealth Advisors specializes in helping clients optimize withdrawal strategies, minimize taxes, and create income plans that maintain lifestyle throughout retirement. Table of Contents Key Takeaways What is a 401k Rollover? Reasons to Consider a Fidelity 401k Rollover Benefits of a Fidelity 401k Rollover Steps to Initiate a Fidelity 401k Rollover Potential Tax Implications Common Mistakes to Avoid Tips for Choosing the Right Fidelity 401k Rollover Option Comparing Fidelity with Other Providers Helpful Resources and Tools Working with an Independent Financial Advisor Conclusion See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... What is a 401k rollover? A 401k rollover is a process of transferring your retirement savings from one qualified plan to another without incurring any tax penalties. When you switch jobs or retire, you may have the option to roll over your 401k plan into an Individual Retirement Account (IRA) or a new employer's 401k plan. A Fidelity 401k rollover involves transferring your 401k plan to a Fidelity IRA account. This allows you to consolidate your retirement savings into a single account and take advantage of Fidelity's investment options, low fees, and exceptional customer service. Reasons to consider a Fidelity 401k rollover There are several reasons why you may want to consider a Fidelity 401k rollover. First and foremost, it allows you to take control of your retirement savings by consolidating all your accounts into one place. This makes it easier to manage your investments and track your progress towards your retirement goals. Second, Fidelity offers a wide range of investment options, including mutual funds, exchange-traded funds (ETFs), individual stocks, and bonds. By rolling over your 401k plan into a Fidelity IRA, you can choose from a diverse selection of investment options that align with your risk tolerance and investment objectives. Third, Fidelity's fees are among the lowest in the industry. This means you can keep more of your hard-earned money invested in your retirement account, rather than paying high fees to manage your investments. Understanding the Potential Benefits of a Fidelity 401k Rollover Rolling over your 401k plan into a Fidelity IRA offers several benefits, including: Consolidation of retirement accounts By rolling over your 401k plan into a Fidelity IRA, you can consolidate all your retirement accounts into one place. This makes it easier to manage your investments and track your progress towards your retirement goals. Wide range of investment options Fidelity offers a diverse selection of investment options, including mutual funds, ETFs, individual stocks, and bonds. This allows you to build a well-diversified portfolio that aligns with your risk tolerance and investment objectives. Low fees Fidelity's fees are among the lowest in the industry, which means you can keep more of your hard-earned money invested in your retirement account. This can have a significant impact on your long-term savings. Exceptional customer service Fidelity is known for its exceptional customer service. Whether you need help choosing investments, managing your account, or planning for retirement, Fidelity's team of experts is available to assist you every step of the way. Steps to initiate a Fidelity 401k rollover Initiating a Fidelity 401k rollover is a straightforward process. Here are the steps involved: 1. Open a Fidelity IRA account: If you don't already have a Fidelity IRA account, you'll need to open one. This can be done online in just a few minutes. Pro tip: If you need additional advice beyond just your 401k rollover like tax planning in retirement, creating income in retirement, or planning for retirement, you can contact us to speak with one of our financial advisors. 2. Contact your 401k plan administrator: Contact your 401k plan administrator and request a rollover distribution. They will provide you with the necessary paperwork and instructions. 3. Complete the paperwork: Fill out the necessary paperwork to initiate the rollover distribution. This typically includes a distribution request form and a Fidelity IRA account application. 4. Submit the paperwork: Once you've completed the paperwork, submit it to your 401k plan administrator. They will process the distribution and send the funds to your Fidelity IRA account. 5. Choose your investments: Once the funds are in your Fidelity IRA account, you can choose your investments based on your risk tolerance and investment objectives. Potential tax implications of a Fidelity 401k rollover It's important to understand the potential tax implications of a Fidelity 401k rollover. If you're rolling over your 401k plan into a traditional IRA, the transfer is tax-free as long as you complete the rollover within 60 days. However, if you miss the 60-day deadline, the distribution will be subject to income taxes and potentially an early withdrawal penalty. If you're rolling over your 401k plan into a Roth IRA, the transfer will be subject to income taxes. However, once the funds are in your Roth IRA account, they will grow tax-free and you won't have to pay taxes on any qualified withdrawals in retirement. Warning: We recommend talking to a financial advisor to help avoid serious tax mistakes. Covenant can help. Common mistakes to avoid when doing a Fidelity 401k rollover When doing a Fidelity 401k rollover, there are several common mistakes to avoid. These include: Missing the 60-day deadline If you're rolling over your 401k plan into a traditional IRA, it's important to complete the rollover within 60 days. If you miss the deadline, the distribution will be subject to income taxes and potentially an early withdrawal penalty. Not considering your investment options When rolling over your 401k plan into a Fidelity IRA, it's important to consider your investment options carefully. Fidelity offers a wide range of investment options, so take the time to choose investments that align with your risk tolerance and investment objectives. Forgetting about fees While Fidelity's fees are among the lowest in the industry, it's still important to understand the fees associated with your investments. Make sure you're aware of any fees before choosing your investments. Ignoring After-Tax 401k Contributions Have you made after-tax contributions to your 401k plan? If so, you'll want to make sure to analyze your options for rolling over after-tax money to a Fidelity Roth IRA instead of a Fidelity Rollover IRA. Cashing Out Cashing out instead of rolling over results in immediate income taxes and, if under age 59½, a 10% early withdrawal penalty. Forgetting about Old 401(k)s Neglecting to roll over old accounts can lead to increased fees and reduce the ability to strategically manage retirement assets. Not Rolling Over Employer Stock Forgetting to consider the net unrealized appreciation (NUA) tax strategy for highly appreciated employer stock can lead to higher taxes. Not Considering Loan Repayment If you have an outstanding loan from your 401(k), understand the repayment rules to avoid it being considered a taxable distribution. Poor Timing Performing a rollover during market volatility may lead to selling low and buying high. Unfortunately, mistakes are common. You may avoid common and not so common mistakes by talking to an experienced financial advisor at Covenant Wealth Advisors. Contact us for a free retirement assessment. Tips for choosing the right Fidelity 401k rollover option When choosing a Fidelity 401k rollover option, here are some tips to keep in mind: Consider your investment objectives Before choosing a Fidelity 401k rollover option, consider your investment objectives. Are you looking for growth, income, or a combination of both? This will help you choose investments that align with your goals. Decide between a traditional or Roth IRA When rolling over your 401k plan into a Fidelity IRA, you'll need to decide between a traditional or Roth IRA. Consider your tax situation and retirement goals when making this decision. Understand the fees Make sure you understand the fees associated with your Fidelity IRA account and any investments you choose. This will help you make informed decisions that align with your long-term financial goals. Download Free: Should I Rollover My Dormant 401(k)? [New for 2025] Comparing Fidelity 401k rollover options with other providers While Fidelity is a popular choice for 401k rollovers, it's important to compare your options with other providers before making a decision. Some other providers to consider include Vanguard, Charles Schwab, and TD Ameritrade. When comparing providers, consider factors such as investment options, fees, and customer service. Choose a provider that offers the investment options and services that align with your long-term financial goals. Resources and tools to help with your Fidelity 401k rollover decision There are several resources and tools available to help you make informed decisions about your Fidelity 401k rollover, including: Fidelity's website Fidelity's website offers a wealth of information about 401k rollovers and other retirement planning topics. You can also use their online tools to compare investment options and estimate your retirement income. Financial advisors If you need more personalized guidance, consider working with a financial advisor such as our firm, Covenant Wealth Advisors. We can help you evaluate your options and make informed decisions based on your unique financial situation. Even better, we specialize in retirement income planning, tax planning, and investing for retirement specifically for individuals aged 50+ who have over $1 million of investments. Retirement planning calculators There are several retirement planning calculators available online that can help you estimate your retirement income and determine how much you need to save to reach your goals. Should you partner with an independent financial advisor or a Fidelity financial advisor? Fidelity is a well-known and service friendly custodian for 401k rollovers. We know this first hand because most of our investment advisory clients house their accounts at Fidelity. While Fidelity may be a great choice for your 401k rollover, Fidelity may not provide the comprehensive advisory services you need as you transition to and through retirement. For investors with over $1 million in savings and investments, you may benefit by working with an experience financial advisor independent of Fidelity, but who also utilizes Fidelity services for account custody. At Covenant Wealth Advisors, we specialize in all facets of retirement and can help you answer many questions including the following: How can I reduce taxes in retirement? What is the optimal order of withdrawal from my retirement accounts in retirement? When can I retire? How can boost after-tax returns on my retirement portfolio? Will I be able to maintain my lifestyles in retirement? How can I maximize social security benefits? How do I inflation-proof my retirement income? What should my investment strategy be in retirement? Talk to a fiduciary financial advisor at Covenant Wealth Advisors by requesting your free retirement assessment today. See How Our Financial Advisors Can Help You Plan for Retirement Retirement Planning  - unlock retirement strategies and optimize your cash flows. Investment Management  - our team designs, builds, and manages custom portfolios tied to your life. Tax Planning  - Creative tax strategies, Roth conversions, RMDs, charitable giving and more... Conclusion In conclusion, a Fidelity 401k rollover can offer you valuable advantages when it comes to managing your retirement savings. By consolidating your accounts, choosing from a diverse selection of investments, and taking advantage of low fees and exceptional customer service, you can take control of your financial future. But, Fidelity may not offer the specialized and comprehensive advice you need around retirement. For more personalized advice, you may benefit by partnering with an experienced financial advisor at Covenant Wealth Advisors. When making the decision to do a Fidelity 401k rollover, it's important to consider your investment objectives, understand the potential tax implications, and choose the right provider for your needs. By following the steps outlined in this guide and using the available resources and tools, you can make informed decisions that align with your long-term financial goals. About the author: Mark Fonville, CFP® CEO and Senior Financial Advisor Mark is the CEO of Covenant Wealth Advisors  and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule your free retirement assessment today   Disclosure: Covenant Wealth Advisors "CWA" is a registered investment advisor with offices in Richmond and Williamsburg, VA. CWA was not compensated by Fidelity for this article and Fidelity is not affiliated with CWA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

Picture this: you've spent years diligently saving for  retirement , carefully choosing investments, and watching your nest egg grow. But what if I told you there's a way to potentially make your money work even harder for you, simply by being strategic about where you keep different types of investments? Welcome to the world of asset location strategy - your secret weapon for smarter   retirement planning ! While most investors are familiar with asset allocation (spreading investments across various asset classes), asset location strategy often flies under the radar. This powerful approach involves strategically placing investments across different account types to optimize tax efficiency and potentially boost your after-tax returns. Think of it as organizing your financial house in a way that keeps Uncle Sam's hands out of your pockets as much as legally possible! Key Takeaways: Asset location strategy aligns investments with the most  tax-advantageous  account types Strategic placement can significantly reduce your tax burden and enhance long-term returns Different account types serve distinct purposes in your tax optimization strategy Regular review and rebalancing ensure your strategy remains effective as tax laws and circumstances change Proper implementation can lead to meaningful increases in after-tax  wealth  over time 💡 Pro Tip:  Checklists can help ensure you don't miss costly mistakes with your investment portfolio and tax strategy. Download our free cheat sheet: What Issues Should I Consider When Reviewing My Investments? Table of Contents: Key Takeaways Asset Location vs. Asset Allocation Potential Benefits of Asset Location Strategy Understanding Your Account Types for Optimal Location The Art of Strategic Placement Implementation: Making Asset Location Work for You Common Pitfalls to Avoid: Capital Gains Taxes Advanced Strategies for Maximizing Tax Benefits Key Metrics to Track with Asset Allocation FAQs Conclusion The Dynamic Duo: Asset Location vs. Asset Allocation Let’s start by clearing up a common source of confusion. Think of asset allocation as choosing the right ingredients for your retirement recipe—it’s about managing risk by diversifying across stocks, bonds, and other investments based on your goals and risk tolerance. Asset location, meanwhile, is like deciding which cabinet to store each ingredient in to maintain maximum freshness and minimize waste (taxes, in this case). While allocation focuses on risk management, location zeros in on tax efficiency by considering the tax characteristics of different investments. It’s like having a well-organized kitchen where everything has its perfect place. Together, they create a more robust   retirement strategy  than either could achieve alone. The magic happens when these strategies work in harmony! Potential Benefits of Asset Location Strategy Let's break down all the potential juicy benefits of a smart asset location strategy! Here's what you can look forward to when you organize your investments in the most   tax-savvy  way: Immediate Tax Savings:  Simply put, you'll likely pay less in taxes each year by keeping investments in their most tax-efficient homes. It's like getting a bonus just for being organized! Tax-inefficient investments (like bonds) go in tax-sheltered accounts, while tax-efficient investments (like index funds) go in taxable accounts. Supercharged Long-term Growth:  When you save on taxes, that money stays invested and compounds over time. Even small tax savings today can grow into impressive sums over decades. Think of it as giving your investments a little extra fertilizer to help them grow bigger! Flexible Retirement Income Planning:  Having different account types (tax-deferred, tax-free, and taxable) gives you amazing control over your retirement income. Need to keep your tax bracket in check? You can pick and choose which accounts to tap based on your tax situation each year. It's like having different piggy banks for different needs! Enhanced Estate Planning Benefits:  Your heirs will love you for this one! Different accounts get different tax treatment when inherited: Roth accounts pass tax-free to heirs Taxable accounts get a step-up in basis (bye-bye   capital gains !) Traditional IRAs allow heirs to spread tax impact over time More Tax-Efficient Portfolio Rebalancing:  With each investment in its optimal location, rebalancing becomes more tax-efficient. You can   often rebalance  within tax-sheltered accounts without triggering taxable events. Sweet! Maximized Social Security Benefits:  Smart withdrawal strategies across different account types can help reduce the taxation of your Social Security   benefits in retirement . It's like getting more bang for your Social Security buck! Greater Control Over RMDs:  By thoughtfully distributing assets between traditional IRAs and other accounts, you can better manage required minimum distributions (RMDs) and their tax impact in retirement. Investment Cost Efficiency:  When investments are in their optimal locations, you might reduce transaction costs and avoid unnecessary trading. Every penny saved is a penny that can keep growing! Peace of Mind & Clarity:  A well-organized financial house just feels better! When everything has its proper place, it's easier to track, manage, and adjust your investment strategy as needed. Plus, you'll sleep better knowing you're being super efficient with your hard-earned money! Remember, these potential benefits can compound over time - the sooner you implement a smart asset location strategy, the more you can potentially gain from it. It's like planting a tree; the best time was 20 years ago, but the second-best time is today! Understanding Your Account Types for Optimal Location Before we dive into the nitty-gritty of where to put what, let's explore the three main types of accounts at your disposal. Each comes with its own tax personality, and understanding these differences is key to making smart placement decisions. Tax-Deferred Accounts (Traditional IRAs, 401(k)s, TSP):  Think of these as your "delay the tax bill" accounts. They're perfect for investments that generate regular taxable income, like bonds. The beauty here is that you won't pay taxes on the growth until you withdraw the money, ideally when you're in a lower   tax bracket  during retirement. It's like getting an interest-free loan from Uncle Sam on your tax bill! Tax-Exempt Accounts (Roth IRAs, Roth 401(k)s, HSA):  These are your "tax-free growth superstars." They're ideal for investments with high growth potential since all that appreciation won't face taxes when you withdraw it. Picture planting a seed that grows into a mighty oak—and you get to keep every branch tax-free! The catch? You pay taxes on the money before it goes in, but then you're done with taxes forever on that money. Taxable Accounts:  These regular brokerage accounts are like your everyday checking account's sophisticated cousin. They're perfect for tax-efficient investments like index funds and qualified dividend-paying stocks. While you'll pay taxes along the way, you can take advantage of lower  capital gains rates and tax -loss harvesting opportunities. Plus, they offer maximum flexibility since there are no withdrawal rules or age restrictions. The Art of Strategic Placement Now that we understand our account types, let’s talk about how to match investments with their ideal homes. This is where the real magic happens! Bonds and Fixed Income:  These income-generating investments are typically best suited for tax-deferred accounts. Why? Because interest payments are taxed at your ordinary income rate, which can be pretty steep. By housing bonds in a traditional IRA or 401(k), you defer those   taxes until retirement  when you might be in a lower tax bracket. Additionally, taxable bonds are best suited for tax-deferred accounts to avoid higher ordinary income tax rates on interest payments. Growth Stocks and Aggressive Investments:  These are perfect candidates for your Roth accounts. If you’re betting on the next big thing or investing in high-growth potential companies, wouldn’t it be nice to keep all those gains tax-free? That’s exactly what a Roth account lets you do. It’s like having a tax-free garden where your financial flowers can bloom unrestricted! Equity funds and equity mutual funds can also be strategically placed in Roth accounts for tax-free growth. Index Funds and ETFs:  These often work well in taxable accounts because they’re generally already relatively tax-efficient. Many index funds have low turnover, meaning fewer taxable events, and qualified dividends are taxed at preferential rates. Plus, if you need to sell some investments for a major purchase, these accounts offer the most flexibility. These are considered tax efficient assets and are suitable for taxable accounts. International Investments: International investments are often best placed in taxable accounts. The main reason comes down to something called the foreign tax credit - think of it as a dollar-for-dollar reduction in your U.S. taxes for the foreign taxes you've already paid on your international investments. Here's the catch though - you can only claim this credit in taxable accounts, not in retirement accounts like IRAs or 401(k)s. Real Estate Investment Trusts (REITs):  These can be tricky because they generate high yields but don’t qualify for preferred tax treatment. Consider keeping these in tax-deferred accounts or tax-free accounts to shelter their income until retirement. Implementation: Making Asset Location Work for You Here's your step-by-step guide to putting this strategy into action: Start with a Portfolio Review: List all your investment accounts and their tax treatment Document current investment locations and asset allocation Identify opportunities for optimization Calculate your current tax exposure Analyze Your Tax Situation: Understand your current tax bracket Project your likely retirement tax bracket Consider state tax implications Factor in required minimum distributions (RMDs) Create Your Placement Strategy: Match investments with their optimal account types Consider future flexibility needs Factor in rebalancing requirements Plan for eventual withdrawals Monitor and Adjust: Review your  strategy annually Adjust for life changes and tax law updates Rebalance when necessary Track tax efficiency metrics Common Pitfalls to Avoid: Capital Gains Taxes Even the best-laid plans can go awry if you're not careful. Here are some common mistakes to watch out for: The All-or-Nothing Trap: Don't feel like you need to move everything at once. Sometimes, transaction costs or tax implications make it better to implement changes gradually. Forgetting About Flexibility:  While tax efficiency is important, don't sacrifice liquidity if you might need access to funds before retirement. Ignoring Account Limits:  Remember that   retirement accounts  have contribution limits and withdrawal restrictions. Factor these into your planning. Behavioral Mistakes:  With asset location, each account will perform and behave very differently. This might leave you wondering why one account is outperforming or underperforming another account. Investors often make the mistake of wanting to change their tax-deferred account allocation after seeing that their fixed income may not be performing as well as their equities. Remember, the key is to target the proper mix across all of your accounts when combined! Advanced Strategies for Maximizing Tax Benefits Once you’ve mastered the basics, consider these advanced techniques: Tax-Loss Harvesting:  In taxable accounts, strategically realize losses to offset gains while maintaining your overall investment strategy. Asset Location Rebalancing:  Instead of selling investments to rebalance, direct new contributions to underweight areas across your accounts. Multi-Year Tax Planning:  Consider strategies like Roth conversions or   strategic withdrawals  to manage your tax bracket over time. Ordinary income tax rates, which can be as high as 37%, significantly impact the tax liabilities associated with these actions, making strategic planning essential. Need help with your asset location strategy? Get Your Free Retirement Roadmap to Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Key Metrics to Track with Asset Allocation How do you know if your asset location strategy is working? Here are some key metrics to track: After-tax returns across your entire portfolio Tax efficiency ratio (taxes paid divided by portfolio value) Withdrawal flexibility and options Overall portfolio expenses and transaction costs A Real-World Example: Sarah's Smart Asset Location Strategy Meet Sarah, a 45-year-old tech executive with a $1 million portfolio spread across traditional IRA ($400,000), Roth IRA ($200,000), and taxable accounts ($400,000). Like many successful professionals, she had a solid investment mix but hadn't paid much attention to which investments lived where. Think of it like having a well-stocked kitchen but with ingredients stored randomly - everything's there, but not necessarily in the best spot! The "Before" Picture:   Sarah had similar investment mixes across all accounts: Growth Stocks: 50% ($500,000) Bonds: 30% ($300,000) REITs: 10% ($100,000) International Stocks: 10% ($100,000) Her annual tax bill on investment income? About $6,000. Ouch! The "After" Picture:   Working with her advisor, Sarah reorganized her investments like a pro: Traditional IRA ($400,000): Bonds and REITs (the tax-inefficient stuff) Why? Income from these investments now grows tax-deferred Roth IRA ($200,000): High expected growth small-cap stocks Why? Potential future growth is tax-free forever! Taxable Account ($400,000): Low-turnover   index funds and tax-efficient  international stocks Why? These generate qualified dividends at lower tax rates The Result:  Sarah's new annual tax bill on investment income? Just $1,200! That's $4,800 in annual   tax savings . Over 20 years, assuming these savings are reinvested and grow at 7% annually, this "free lunch" could add up to an extra $160,000 in her retirement  nest egg. Not bad for simply rearranging where she keeps her investments! The best part? Sarah didn't change her overall investment mix - she just got smarter about where she keeps everything. It's like getting a better return without taking on any extra risk. Who says you can't have your cake and eat it too? 😊 Remember, while Sarah's fictional story shows the power of smart asset location, your situation might be different. Consider working with a   financial advisor  to create a strategy tailored to your unique circumstances. After all, everyone's financial recipe for success is a little different! FAQs Q: Is Asset Location Worth It? A: According to Vanguard research, asset location strategies can add up to 0.75% in annual after-tax returns. While this might sound modest, it's like finding free money under your couch cushions year after year! The benefits compound significantly over time, especially for larger portfolios and investors in higher tax brackets. The catch? You need multiple account types and some patience to see the magic happen. Q: Should I DIY or Hire a Pro? A: Think of asset location like cooking - some people can whip up a gourmet meal solo, while others prefer a professional chef! If you're comfortable managing investments, you have deep tax planning expertise, and have a straightforward portfolio, a DIY approach can work well. However, if you're juggling multiple accounts, value your time, have a high net worth over $2 million, or complex estate planning needs, professional guidance might be worth the investment.   Vanguard's research  suggests professional financial advice can add up to 3% in additional annual returns beyond what an investor can do on their own through various strategies, including asset location. Q: How Much Can Asset Location Strategy Improve My Returns? A: The potential benefit from proper asset location will depend on your personal situation. However, the research paints an encouraging picture and reveals that asset location may improve your after-tax returns by 0.05% to 0.41% depending upon the studies below: Vanguard: 0.05% to .30% in annual improvement Schwab: 0.14% to 0.41% in annual improvement FPA Journal: 0.10% to 0.20% in annual improvement On a $2 million portfolio, even a modest 0.25% improvement could mean an extra $639,217 over 30 years. This assumes a 5% after-tax return vs a portfolio with a 5.25% after-tax return. Not too shabby for simply being strategic about where you keep your investments! Q: When Does Asset Location Strategy Make the Most Sense? A: Asset location is most effective in the following situations: Significant Taxable Investments:  If you have a substantial portion of your investments in taxable accounts. Long Time Horizon:  The benefits of asset location compound over time, making it more impactful for long-term investors.   High Tax Bracket:  The higher your tax bracket, the more you can benefit from tax-efficient strategies like asset location. Varied Asset Classes:  If you invest in a mix of asset classes with different tax treatments (e.g., stocks, bonds, REITs). Think of it like a fine wine - it gets better with time, but you need the right conditions to make it worthwhile. If you check these boxes, asset location could be your secret sauce for better after-tax returns! Conclusion A well-executed asset location strategy is like conducting a financial orchestra—each investment plays its part in the right place at the right time. While it requires some initial planning and regular maintenance, the potential boost to your after-tax returns can make a meaningful difference in your retirement lifestyle. Remember, everyone's situation is unique. Consider working with a   financial advisor  who can help tailor these strategies to your specific circumstances and goals. They can help you fine-tune your approach and ensure your retirement symphony plays out exactly as you've planned. The beauty of asset location strategy is that it's one of the few "free lunches" in investing—a way to potentially improve your returns without taking on additional risk. By being thoughtful about where you hold your investments, you can help ensure more of your hard-earned money stays in your pocket where it belongs! Want help optimizing your portfolio for improved asset location?   Request a free retirement roadmap  from our firm. We'll address asset location, retirement, taxes, and more.  About the author: Matt Brennan, CFP® Senior Financial Advisor Matt is a Senior Financial Advisor with Covenant Wealth Advisors and a CERTIFIED FINANCIAL PLANNER™ practitioner. He has over 20 years of experience in the financial services industry in the areas of financial planning for retirement, tax planning, and investment management. Schedule your free retirement assessment today   Disclosures:  Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content may contain certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER ™ professional  with the assistance of AI.  No  advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.

What should you do before you retire from your job? After all, you can't just stop showing up one day. Among the many other things on your to do list for retirement, you must notify your employer. Often, they require you to submit an official retirement letter of resignation. Even if writing a retirement resignation letter isn't required, it's the considerate thing to do! Download Now: 15 Free Retirement Cheat Sheets to Help Avoid Costly Retirement Mistakes [New for 2025] A retirement letter of resignation is more than just a formality. It sets in motion a process for handling changes in pay, insurance, and your retirement benefits. While a letter of resignation is important, a financial advisor can help you navigate all of the complexities of making your money last in retirement. Request a free retirement plan  personalized for your situation today! How can you write a retirement letter of resignation that helps you and your company transition to the next step? This article will address how to write a retirement letter of resignation and provide an example that you can use as a template for your own retirement letter. What Should You Include In Your Retirement Resignation Letter? Your resignation letter is the official notice that you're leaving your job. Since this is your formal notice, it's important to get right. Let's get to the specifics. What should your retirement letter of resignation include? The letter should be formatted with the same basic elements of any formal letter, plus some retirement-specific data, as well as a statement of your retirement plans. Perhaps the most crucial element? The date. Dating your resignation is vital because sometimes retirement benefits hinge on not only the retirement date itself but when you provide notice. Including the date on the letter offers a tangible way to verify when you gave notice—and how much time you provided—should a question from human resources or senior management arise. Next, your letter should include a customary salutation and address it to your boss or the appropriate supervisor. In the body of the letter, state your intended retirement date (your last day) and your thoughts on a transition plan. If you plan to assist with the transition or help train a new person, then make those intentions known. This act could establish more goodwill, which could go a long way if you want to transition into consulting or other part-time work in retirement. You may only wish to make yourself available during a specific time frame, like three months. If that’s the case, be as clear as possible. For example, you might say that you will be retiring on January 1, 2026, but you are willing to stay for four weeks or until a specific date to help train your replacement. Also, remind your employer of your current job title, how long you’ve been with the company and your most significant achievements. For example, you might say, “I've loved my 25 years with "x" company and leading the team to create our best-selling product.” If you want to add a personal touch to your letter, express your gratitude for having a rewarding career at the company and share your retirement plans. Lastly, close out the letter and include your contact information. You’ll need to decide how much time you want to give your employer. While two weeks' notice is standard, many employers would appreciate a longer notice period, especially for retirement. For example, we had a team member at my firm, Covenant Wealth Advisors , notify me of his goal for retirement two years ahead of time. Guess, what? I was super appreciative of him being so considerate because it helped me plan better. It also helped him because I was able to make his transition much more comfortable from both a timing and monetary perspective. It's essential to give your employer enough notice to maintain goodwill and aid in the transition period. If you know you're retiring at the end of this year, consider drafting your letter at least a month or so in advance. Even longer doesn’t hurt. Tips To Make Your Retirement Letter Polished and Professional Alongside being a respectful gesture, your retirement letter of resignation is also an official document that HR will use to begin processing your retirement paperwork. As it is an official document, you want it to be a good representation of you and the work you've done. To that end, consider the following to get your point across in a professional way: 1. Strike the right tone Be commanding and firm, but at the same time respectful. Depending on your situation, your employer may hope to convince you to stay longer. If you are confident of your plans to retire , then a firm tone can help convey that message. However, there is no need to be harsh about it. A concise and deliberate statement is entirely appropriate. 2. Proofread You don't want to misspell your manager's name or forget to capitalize the company—awkward oversite. Ensure it's free of errors and high-quality, including the grammar—yes, punctuation and commas count. If you have a particularly literary friend, have them check it for you. You can also use an online proofreading tool such as Grammarly . 3. Choose the proper delivery method. Your employer may have a particular required delivery method. If so, make sure to follow it. Regardless of the necessary delivery method, it’s a good idea to submit the letter electronically, so there is a record. Copy your boss and the appropriate person at HR. These writing tips will help your business letter be as polished and professional as possible. We have created three sample retirement letter templates that you can use to write your own retirement letter of resignation. Simply copy the template and customize it to fit your needs. Download Now: 15 Free Retirement Cheat Sheets to Help Avoid Costly Retirement Mistakes [New for 2025] Example 1: Retirement Letter Sample June 6, 2024 Name Street Address City, State Supervisor Name Title Company Name Company Street Address Company City, State Dear Mr. or Ms. Supervisor, This letter expresses my intent to retire on (Month) (Day) of this year. I have enjoyed my XX years with the company and appreciate the opportunities to help our (clients/customers). I know it will take some time to ensure that my replacement is adequately trained and ready to take over my current responsibilities. I am willing to make myself available through the month of (Month) if you think it would be beneficial. Thank you for the opportunity to learn and grow with an incredible team and company. My phone number is xxx-xxx-xxxx and my email address is x. Sincerely, Signature Typed Name Example 2: Retirement Letter Sample June 6, 2024 Name Street Address City, State Supervisor Name Title Company Name Company Street Address Company City, State Dear [Employer's Name], I am writing to inform you that I have decided to retire from my position as [Job Title] effective [Retirement Date]. After [Number of Years] years of dedicated service to [Company Name], I feel it is time to step back and enjoy my retirement. I want to express my sincere gratitude for the opportunities and experiences that I have gained during my time here. I have learned so much and have had the privilege of working alongside a great team. I appreciate all of the support and guidance that you and my colleagues have provided me throughout my career. In preparation for my retirement, I will ensure a smooth transition by completing any pending tasks and training my replacement, if necessary. I am confident that the skills and knowledge I have gained during my time here will be valuable to me in my retirement and in future endeavors. Please let me know if there are any specific tasks or duties that you would like me to complete before my departure. I will also ensure that all company property and resources in my possession are returned by my last day of work. Thank you again for the opportunity to be a part of this organization. I look forward to maintaining a positive relationship with you and my colleagues in the future. Sincerely, [Your Name] Example 3: Retirement Letter Sample June 6, 2024 Name Street Address City, State Supervisor Name Title Company Name Company Street Address Company City, State Dear [Employer's Name], It is with mixed emotions that I announce my intention to retire from my position as [Job Title] at [Company Name]. My last day of work will be [Retirement Date]. It has been an honor to be a part of this company and work with such a talented and dedicated team. I am grateful for the many opportunities that I have had during my [Number of Years] years of service with [Company Name]. I have enjoyed my time here, but I feel that it is time for me to begin the next chapter of my life. I want to take this opportunity to thank you for your support, guidance, and leadership during my time at [Company Name]. I have learned so much from you and the other members of our team. I am proud of the work that we have accomplished together, and I know that the company will continue to thrive in the years ahead. As I prepare to retire, I am committed to ensuring a smooth transition. I will complete any outstanding projects and work with my colleagues to ensure that my responsibilities are transitioned smoothly. If there is anything specific that you need me to do before my departure, please let me know. I will miss my colleagues and the work that we have done together. I wish you and the company all the best in the future. Sincerely, [Your Name] It can be as simple as the letters above! Again, you could also mention your retirement plans in a sentence or two, but remember, brief is best. See How Our Financial Advisors Can Help You Retire With Confidence Retirement Planning  - Optimize your income and create a roadmap for a secure retirement. Investment Management  - Personalized investing to grow and protect your wealth. Tax Planning  - Identify tax strategies including Roth conversions, RMD management, charitable giving and more... Conclusion Writing a formal retirement letter of resignation is a big step toward officially resigning and leaving your job. It is an important document as it marks the beginning of your next journey. Follow the guidelines above to help your letter be as professional and polished as possible. But, writing your retirement resignation letter is only one step in the process. You'll also need to be financially prepared for retirement. That's where expert advice from Covenant Wealth Advisors can help. At Covenant Wealth, we specialize in financial planning for retirement . Financial planning is the process of determining all of the financial steps you need to take to ensure your money lasts the rest of your life. It’s important to us that you feel confident and prepared for your next step. Ready to set a retirement date? Want to create a customized plan to help you retire without running out of money? Click here to schedule a free retirement assessment. Find out how we can potentially help you maximize your income, reduce taxes, and better manage your investment portfolio in retirement. About the author: Mark Fonville, CFP® CEO and Senior Financial Advisor Mark is the CEO of Covenant Wealth Advisors  and a Senior Financial Advisor helping individuals age 50+ plan, invest, and enjoy retirement comfortably. Forbes nominated Mark as a Best-In-State Wealth Advisor* and he has been featured in the New York Times, Barron's, Forbes, and Kiplinger Magazine. Schedule your free retirement assessment today   Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance, and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place.

Taxes are an inevitable part of American citizenship and the Virginia income tax is no different. The system is two-tiered: federal and state. Taxes at the federal level have the same stipulations across all 50 states. Furthermore, each state makes its own rules on the amount of money their residents pay for state income taxes. Get your Retirement Checklist of over 30 things that you need to think about for your retirement. In Virginia, income taxes pay for many things including schools, parks, recreation, public service, and other amenities. SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. Forty-three states levy a state income tax and and some states have better tax laws than others. If you live in Virginia, you benefit from favorable income tax laws. Virginia has a progressive income tax schedule. A progressive tax is a tax that imposes a lower tax rate on low-income earners. Higher income earners pay a higher tax rate . Consequently, Virginia takes a larger percentage from high-income earners than it does from low-income individuals. This means that the more you make, the higher the percentage of state income tax you pay. Even so, you don’t have to earn much to pay Virginia’s highest tax rate. Residents who earn $17,000 ore more will pay 5.75% of taxable income per year in Virginia income taxes alone. The good news is that Virginia is lower than the national average for state income taxes. California has the highest state income taxes in the country at 13.3% of income. Oregon and Minnesota rank second and third, respectively. There are 7 states that impose zero income tax. So, how does Virginia rank for state income taxes? Let’s take a look… As you can see, Virginia does have favorable state income tax rates. But, with a bit of planning you may be able to reduce your taxable income even further. Here are a few easy fixes to potentially lower your tax bill in 2022 with proper tax planning . 1. Contribute to a Virginia 529 Savings Plan A 529 plan is a savings plan that helps families save for qualified higher education expenses. In a 529 account, your money can grow free from federal taxes and be tax deductible in some situations. Virginia taxpayers enjoy the additional benefit of a state income tax deduction on contributions to their Virginia529 accounts. Through December 31st, 2022, families can deduct up to $4,000 per year per account for 529 plan contributions. Per VirginiaTax.Org, here is how the Virginia 529 plan tax strategy strategy works... If you are under age 70 on or before Dec. 31 of the taxable year, enter the lesser of $4,000 or the amount contributed during the taxable year to each Virginia529 account (Virginia 529 prePAID, Virginia 529 inVEST, College America, CollegeWealth). If you contributed more than $4,000 per account during the taxable year, you may carry forward any undeducted amounts until the contribution has been fully deducted. However, if you are age 70 or older on or before Dec. 31 of the taxable year, you may deduct the entire amount contributed during the taxable year. Only the owner of record for an account may claim a deduction for contributions made. Many people do not know that it is possible to deduct up to 100% of annual Virginia 529 plan contributions. This little known tax benefit is based on a ruling from the Virginia tax commissioner . Many Virginia tax payers and tax preparers believed that deductions were limited to $4,000 per child which was not the case. As you can see, being well informed may allow you to potentially deduct much more than $4,000. In order to be able to deduct more than $4,000 of your contributions, you must establish more than one account. Moreover, each account must differ in one of the following ways. It must have had: a different owner, or a different portfolio allocation Here is an example from the tax commissioner’s ruling: Source: Virginia Tax Virginia 529 account owners who are Virginia taxpayers can really multiply their 529 plan deductions. There is also an unlimited carry forward to future tax years, subject to certain restrictions. SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. Are you over 70 years old? If so, you may deduct the entire amount contributed to a Virginia 529 account in one year! Doing so can provide a legacy for your grandchildren, reduce your Virginia income tax, and help you avoid estate taxes . A 529 account can be set up for anyone, including yourself. Moreover, you can change the beneficiary to another family member without penalty at any time. Proper financial planning can help you determine the best course of action for you. 2. Deduct Private School Tuition via a 529 Plan Does your child or grandchild go to private school in Virginia? In 2022, you can use up to $10,000 per year in 529 funds toward a beneficiary’s private or religious K-12 school tuition. Remember, 529 plan deductions can be Virginia state tax deductible. Example 1: Julie’s grandson, John, goes to private school with a tuition cost of $12,000 per year. Julie wants to be able to deduct part of the tuition to reduce her state income tax in Virginia. Julie opens up a Virginia 529 plan accounts with her son John as the beneficiary. She funds the account with $12,000. Julie can deduct $4,000 on her Virginia tax return and carry forward $8,000 in deductions to future years. Julie then makes a distribution from the 529 plans directly to John’s K-12 school for $10,000. She pays the remaining $2,000 out of pocket. By doing so, Julie reduces her Virginia taxable income by being able to deduct $4,000 on her Virginia tax return in 2022, $4,000 in 2023, and an additional $4,000 in 2024. 3. Purchase Land Preservation Tax Credits to Reduce Virginia Income Tax Land preservation tax credits were created to incentivize Virginian’s to preserve raw land. They are a great strategy to help reduce income taxes in Virginia. Here is how it works. The Commonwealth of Virginia allows you or your business to purchase land preservation tax credits (LPCs) from Virginia landowners. These landowners have made charitable donations of land or easements for conservation purposes. Typically, landowners make a donation and receive up to a 40% income tax credit for the donation. However, sometimes donors don’t want to use all of their tax credits. As a result, they can sell their credits to Virginia residents who want to purchase the credits at a reduced price. Purchasing credits can provide Virginia tax payers with significant tax savings. It also encourages conservation of Virginia farms and other open spaces. Because of the ease of transfer and the attractive discounts, LPCs have become very popular with Virginia taxpayers. To be eligible for tax credits, the easement must qualify as a charitable deduction under the IRS Code and meet additional requirements under the Virginia Land Conservation Incentives Act. Example: Land Preservation Tax Credit Transaction Al and Anne are a married couple and Virginia taxpayer. They expect to have at least $20,000 of Virginia income tax obligation when they file their 2022 Virginia income tax return in May 2023. Al and Anne don’t like paying more than their fair share of taxes. As a result, they would like to offset $20,000 of Virginia income tax with a purchased tax credit. They purchases their credit in October 2022 at a discounted price of 90 cents on the dollar. The discount varies depending on market conditions but typically ranges between 89 cents to 91 cents on the dollar. In this example, they purchase $20,000 in credits for $18,000. Credit purchased………………………………….$20,000 Credit purchase price……………………………..$18,000 Tax Savings…………………………………………………. $2,000 Al and Anne report their $20,000 credit on their Virginia income tax return in April 2023. As Virginia taxpayers, they realize a savings of $2,000 or 10% of their Virginia tax obligation! You may learn more about Virginia land preservation tax credits here . 4. Know Your Virginia Income Tax Exemptions Similar to federal deductions, Virginia gives its residence a chance to exempt costs from their yearly tax return. As of 2022, exemptions include: Yourself Both you and your spouse can take a personal exemption of up to $930. Many couples filing jointly choose to file under the Spouse Tax Adjustment (read more in point 3) in which case each person must exempt themselves. Dependents Your income tax bill can be adjusted up to $930 for dependents. Note, the number of dependents you claim should be the same as the number listed on your federal tax return. Age If you are 65 or older, you can claim up to $800 on your income taxes. If filing jointly, each person must file their own age exemption. Blindness Virginia allows you to exempt $800 for a blindness disability. Again, if filing jointly, each partner must claim their own exemption. Knowing where you are at with your exemptions will help decrease your income tax bill. Exclusions and exceptions do apply for people who only had Virginia residency for part of the year. More information on that can be found here. SPECIAL NOTE FOR INDIVIDUALS AGED 50+ WITH OVER $1 MILLION: Tying your $1 million+ portfolio to your retirement and tax plan can be hard. If you are interested in learning how we can help fully integrate taxes, investments, and retirement income planning, click here for a free retirement assessment . Get more ideas than you thought were possible. 5. Spouse Tax Adjustment Virginia income tax is set up to increase with the amount of income brought in. This can prove difficult for married couples filing jointly, as their combined income would be higher than the income they make separately. In order to combat this problem and keep people filing jointly from paying much more in income taxes, Virginia has established a Spouse Tax Adjustment (STA). By using this form, married couples who each received income in the taxable year are eligible to save over $250 on their income tax bill. The goal of STA is to ensure that a couple filing jointly would not pay more in taxes than the combined total cost of separate filing. If you want to do some calculations to see just how much you would save, use this tool. 6. Lease Your Next Car to Reduce Personal Property Tax While not part of Virginia income taxes per se, Virginia residents pay the most in personal property tax than any other state in America! This is due to the fact that residents are taxed simply for owning a car. According to the Washington Post, the average Virginia resident pays about $960 in personal property taxes for owning their vehicle. This is a large tax that can significantly impact your bill this year. Here are some ways to avoid such a steep price tag. Lease your next car. There are taxes and fees but since you do not own the car, you won’t be responsible for the personal property tax. Downsize. See if you are able to reduce the amount of vehicles your family owns. Each state has its own idiosyncrasies when it comes to tax law. In the case of Virginia, there are many ways to reduce your payment on income taxes this year with exemptions, credits, and deductions. If you would like to talk about your personal situation and how to reduce your Virginia income taxes, contact us today. Our CERTIFIED FINANCIAL PLANNER professionals specialize in fully integrating tax planning with your total investment and retirement plan. Schedule a free retirement assessment. Mark Fonville, CFP® Mark has over 20 years of experience helping individuals and families invest and plan for retirement. He is a CERTIFIED FINANCIAL PLANNER™ and President of Covenant Wealth Advisors . Schedule a free retirement assessment Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond and Williamsburg, VA. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Adviser believes that the content provided by third parties and/or linked content is reasonably reliable and does not contain untrue statements of material fact, or misleading information. This content may be dated.