What is Investment Management?

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What is Investment Management?

Have you ever wondered how people grow their wealth over time or how they save enough money to retire? Investment management is one part of the answer.

Investment management is the process of creating a comprehensive strategy to manage your investments and grow your financial assets. It means looking at your entire financial picture, your goals and their time horizons, your risk tolerance, and more, and then building a portfolio tailored specifically to you.

At CAPTRUST, investment management is one of the three pillars of our wealth management process, along with goal setting and risk management. It’s an important part of financial planning, which also includes strategies like budgeting, saving, and managing debt.

Investment management is something everyone should consider, regardless of your income or net worth, because it can help you understand and balance goals that sometimes compete with one another. It can help you take control of your financial future and make sure your money is working as hard as it can.

Whether you’re working with a financial advisor or managing your own investments, the first step is to name your financial goals. Do you want to save for a down payment on a home in the next five years? Pay for college for your children? Or reach a specific savings goal before retirement? Whatever your goals are, it’s important to define them because then you know how much money you’ll need.

Next, evaluate your risk tolerance. This means figuring out how much risk you’re comfortable taking with your portfolio. Are you the type of person who can handle big swings in the stock market? Or do you prefer a slow and steady approach to growing your wealth?

Once you’ve set your goals and risk tolerance, it’s time to choose specific investments. Examples include mutual funds, exchange traded funds, stocks, bonds, or alternative investments like real estate. The key is to diversify your investments across different asset classes so that you’re managing the risk of large losses while also achieving the returns you need to reach your financial goal. It’s also important to understand the tax implications of each type of investment. Certain investments, like municipal bonds, and certain investment accounts, like 401(k)s, 403(b)s, and individual retirement accounts are tax advantaged.

Deploying the right investments at the right time in your life can help reduce your taxes or at least make them more predictable. Although you don’t need to manage your investments on a day-to-day or even monthly basis, you should check on their progress every year or two, or whenever there’s been a big change in the markets or in your life.

At that point, you may want to make some adjustments. For instance, you might need to rebalance your portfolio to maintain your target risk level. Over time, some investments will likely perform better than others. causing your portfolio to drift away from the original plan. Rebalancing can help you get things back
on track.

The most important thing to remember is that it’s not about choosing the right stocks or funds. It’s about taking a comprehensive look at your entire financial picture and crafting an investment strategy that addresses your specific needs and goals. By taking this holistic approach, you can ensure that all the different pieces of your financial life are working together to create the best possible outcomes.

To learn more, call CAPTRUST. We’re here to help.