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Albuquerque Retirement Planning

Albuquerque retirement planning involves understanding investment basics. In order to secure stable retirement savings for your golden years in Albuquerque, New Mexico, you need to save money and invest it. If the idea of investing makes you nervous, you may want to consult with a New Mexico financial advisor.

The best way to secure your New Mexico early retirement savings plan is to invest wisely, and, even if you have the help of a professional, it's a good idea to understand the basics of investing. For example, do you know what the three types of capital are? Have you heard of asset allocation? If it sounds like a lot of jargon, it's a good idea to start reading about different investment strategies, so you can build a solid foundation.

No one cares about your money as much as you do. Even if you have a wonderful Albuquerque, NM financial advisor to help you plan your retirement savings, it's a good idea to understand investment basics. Sound scary? It's not! All you have to do is start educating yourself, and you'll be on your way to financial freedom.

Types of Capital

There are basically three different types of financial capital. which you'll want to consider when you're planning to make an investment in a business. The first type is called equity capital which is also known as "net worth" or "book value". The equity capital represents the assets minus liabilities, and some businesses are funded entirely on equity capital. With equity capital, you cannot go bankrupt, but it can be extremely expensive to maintain.

The second kind of capital is called debt capital. Debt capital must be paid back a certain date, but in the meantime the owner of the capital excepts interest. So, if you lend money to a company, you get interest on that loan. Young business often grow through debt capital, and some couldn't have formed without it. Debt capital is sometimes known as the cost of capital.

The third kind of capital is specialty capital. Specialty capital has no-cost, and removes the limits of growth. For example, negative cash conversion and insurance float are both types of specialty capital. Negative cash conversion, or vendor financing, involves no upfront cost. The customers order before the business pays. Insurance companies that collect money but don't have to pay it out have "float" money.

Understanding the different kinds of capital can help you make decisions regarding specific investments you might make. Part of Albuquerque retirement planning involves learning different investment terminology so you can make careful decisions. That being said, if you're not interested in studying investment strategies, but you want to invest, consider asset allocation.

Asset Allocation

Asset allocation automatically diversifies your resources among different categories, including stocks, bonds, mutual funds and so forth. Basically, asset allocation helps diversify your portfolio, which is one of the key components of your Albuquerque retirement planning. Investors can lessen risk by carefully planning a balanced portfolio.

Asset allocation models tend to fall amid four different objectives: preservation of capital, income, balanced or growth. Your Albuquerque retirement planning involves considering similar objectives, and you can use asset allocation to achieve your retirement goals. If you're planning to buy a house within the next few years, preservation of capital will be your primary goal.

If you are planning to retire within the next few years, you probably want to focus on creating income. A key component of Albuquerque retirement planning is figuring out how you will access your income during your later years. If all your money is tied up in investments, and you receive no dividends or other forms of income, you should talk to an Albuquerque financial planning advisor about how you'll access your money during your retirement.

A balanced portfolio has both income and growth. Most of a balanced portfolio is invested, and there's very little cash. Typically, a balanced portfolio is a safe option, and may be a good choice for your Albuquerque retirement planning. However, if you've started your Albuquerque retirement planning early, you might consider a growth model.

A growth asset allocation model is great if you're early in your Albuquerque, NM career and planning on securing long-term wealth. In bull markets (good markets), growth portfolios perform very well, and outperform balanced portfolios. However, in bear markets, they're hit the hardest. If you're starting your Albuquerque retirement planning early, though, you can handle a growth portfolio.

As you age, you asset allocation strategy will change. Part of Albuquerque retirement planning is adjusting your savings basing on your current needs. To prepare for your Albuquerque retirement, you'll need to adjust your assets during different phases of your life. Securing your savings for your Albuquerque, New Mexico retirement will involve evaluating your assets at least every decade, and during major life changes.

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Retirement Planners In Albuquerque

Garth Scrivner, CFP(R), CPA/PFS
Garth Scrivner, CFP(R), CPA/PFS
6565 Americas Parkway
Suite 810
Albuquerque, NM 87110

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