Investor Profile Education Module
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One of a suite of individual retirement education modules created for Nationwide Financial, the Investor Profile Education Module helps a plan participant understand their tolerance for financial risk. The module system gives retirement specialists the ability to create longer, fully customizable presentations by allowing them to mix, match and combine individual modules in the suite. This enables the sales force a greater flexibility in planning meetings and answering individual plan and participant needs.
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Investor Profile Education Module
- 2. Investor Profile 2 Do-It- For-Me Do-It- Yourself Help-Me- Do-It Beforeinvesting, carefullyconsider the fund's investment objectives, risks,andcharges andexpenses.The fund prospectus contains this andother important information. Readthe prospectuses carefully before investing. Call 877-NRS-FORU to requestaprospectus.
- 3. Investor Profile 3 1 2 The use of diversification and asset allocation as part of an overall investment strategy does not assure a profit or protect against loss in a declining market.
- 4. Investor Profile 4 International Small-cap Mid-cap Large-cap Bonds Short Term Investments PotentialReward (Thechancetomakemoney) Potential Risk (The chance to lose money) Investing involves market risk.
- 5. Investor Profile 5 Conservative Moderately Conservative Moderate Moderately Aggressive Aggressive International 5% 10% 15% 25% 30% Small-cap 0% 0% 5% 5% 10% Mid-cap 5% 10% 10% 15% 15% Large-cap 10% 20% 30% 35% 40% Bonds 40% 35% 25% 15% 5% Short-term investments 40% 25% 15% 5% 0% Asset allocation models provided by Ibbotson Associates Advisors, LLC, a leading financial consulting organization. Ibbotson uses a broad approach to diversify holdings across asset categories, which include combinations of different types of stock investments, diversified real return, bonds, and short-term investments. International investing involves risks not associated with investing solely in the U.S., such as currency fluctuation, political risk, differences in accounting and limited availability of information. Small-cap funds invest in stocks of small or emerging companies that may have less liquidity than those investing in larger, established companies and may be subject to greater price volatility and risk than the overall stock market. Short-term investments may not keep pace with inflation.
- 6. Investor Profile 6 Questions? Call us. Weβre here to help
Editor's Notes
- Saving for retirement is a great thing. But as you invest into your retirement plan, knowing what kind of investor you are can help you make better decisions. For instance, it can help you choose different types of investments that fit with your personal goals. Today, weβll explore how you can get to know your inner investor.
- [disclosure] Weβre going to talk about investing over the next few minutes. When you consider investing in any fund, carefully consider its investment objectives, risks, and charges and expenses. Fund prospectuses contains this and other important information. Read them carefully before investing.Deciding what kind of investor you may be could be thought of in terms of craving brownies for dessert. You can make brownies from scratch using all the ingredients from the cupboard β a do-it-yourself investor. You can buy a box mix β a help-me-do-it investor. Or you can buy brownies at the bakery β a do-it-for-me investor.The DIY investor. This is the person who wants to choose and manage their funds from the lineup available through the plan. They often use an asset allocation model to help them. Weβll talk more about those models in a bit.The Help-Me-Do-It person is more likely to choose a plan option like target-date funds. They simply decide when they want to retire or begin taking income and choose the target date fund closest to their timeline. Their investments are pre-mixed and rebalanced automatically over time as they get nearer to the retirement date. [disclosure] Target date funds use a strategy that reallocates equity exposure to a higher percentage of fixed investments over time. As a result, the funds become more conservative as the investor approaches retirement. Remember that no strategy can assure a profit or prevent a loss in a declining market. Furthermore, there is no guarantee against loss of principal at any time, even at the retirement date.βDo-it-for-meβ investors may those who donβt have the time or motivation to manage their accounts and prefer a professional to do it. Not all plans offer a managed account option, but if youβre a do-it-for-meinvestor, you may want to ask about it.
- Knowing your investor profile helps you invest your money in a variety of investments (known as asset allocation or diversification). The right mix of investments is different for everyoneβ¦and the key to determining your investor profile and to finding a mix of investments that fits your individual goals is to know:1) When you want to retire (or plan to start spending the money), and 2) How much market investment risk and market volatility youβre comfortable with. Deciding when to retire helps figure out your time horizon. Time horizon is a fancy way of saying how long your money can stay invested before you need to withdraw it. Time always plays a big role in helping you get ready for retirement. And it plays an important role once you retire because when you begin making withdrawals, you have to know how long the money will last in your account.The amount of risk and market volatility you are comfortable with is known as your risk tolerance. It can change over time, so itβs smart to review your situation every year with a plan rep.
- Whether youβre a conservative investor or an aggressive investor β it all has to do with the comfort you have with market risk and the time you have to invest in the market.If one is comfortable with the normal ups and downs of the market, and they have more than 10 years to invest, they typically can be more aggressive in the investments they choose. And vice versa, if someone is less than ten years away from retiring, theyβll likely tend to be more conservative in their investments.The three major investment types (stocks, bonds, and short-term investments) have categories called asset classes. Investments in the same asset class tend to behave similarly in the market. So, while one class may decline in value, another may gain value. The chart youβre looking at shows us the potential risks and returns with each class.
- These models give you an idea of how to choose investments based on your investor profile. They can help you determine what percentage of your assets to put in each asset class. Theyβre called βasset allocation models.βThe use asset allocation models, or any form of asset allocation does not get rid of risk. For exampleβ¦β’ β¦some of these models suggest investing in international funds, which involves risks not associated with investing solely in the U.S., such as currency fluctuation, political risk, differences in accounting and limited availability of information. β’ Small-cap funds invest in stocks of small or emerging companies that may have less liquidity than those investing in larger, established companies and may be subject to greater price volatility and risk than the overall stock market.β’ Short-term investments may not keep pace with inflation. The point is, while the use of asset allocation does not guarantee profits or insulate from potential losses in a declining market, it can help you manage risk. After all, the risk you assume for investing in an asset class is generally proportional to how much of the investment is placed in it. If you are a do-it-yourself kind of investor, these models can help you choose and mange your individual funds on your own. If youβre a help-me-do-it investor or even a do-it-for-me investor, it helps to understand how your investments can be managed on your behalf.
- [Note to Presenter: If time permits, walk through Investor Profile Questionnaire during group meeting]Talk with me today to learn how you can take 10 minutes to answer just a few questions to determine your specific investor profile. We use what we call the βInvestor Profile Questionnaireβ to help you find out yours. And when you complete the questionnaire, youβll be able to identify whether youβre Aggressive, Moderately aggressive, Moderate, Moderately conservative, or Conservative. And whether youβre do-it-yourself, help-me-do-it or do-it-for-me, you can ask me for help to make your retirement decisions easier. Investing in your future doesnβt have to be overwhelming. And weβll help keep it simple.