Why the Core matters and how to get started.
by Jessie Zymanski, Vice President, Blackrock
My friends and family often ask me how to get started with investing; they hope that because I work in finance, I might have the inside scoop.
So here it isâthe first step is all about you. Itâs about what you wantâyour goals, how long you have to invest, and how much risk youâre willing to take. Those are the essential ingredients of a portfolio thatâs built for you and meant for the long haul. And âlong haulâ is the key here because most of us, myself included, just donât have the time or expertise to adjust our portfolios all the time. A solid core portfolio is the foundation that you build on.
When I say things like âlong haulâ or âcoreâ to my friends and family, most of the time their eyes glaze over. Itâs too hard to think about what they want in the abstract. They want clear next steps.
As of this week, Iâll have a better answer for themâthe iShares Core Builder.
The tool asks five simple questions to help you flesh out what you want from your portfolio. It then provides a starting point to match.
I decided to try the tool for myself, to see how it would work on my own portfolio. Hereâs what I found:
- First and foremost, the tool helped me visualize my portfolio. Iâm investing for retirement (which is about 30+ years from now). Based on that time horizon, the tool suggested I need to increase my allocation to emerging markets. Emerging markets, while volatile, can provide portfolio diversification and the potential for growth, and I need growth in my long term portfolio. Iâve known that I need to make changes for a while; the tool helped crystallize what I need to do.
- I entered in an initial investment that matches the amount I have in my retirement account. If I had entered a smaller investment amount, the tool would have optimized my results with fewer funds to minimize transaction costs. Pretty cool, considering I donât want to have to do any more work than absolutely necessary to achieve my goals.
- I was able to see how my customized portfolio stacked up versus another person with similar goals. It helped to see where my portfolio was similarâand differentâbased on my own unique goals.
- I also like that you can purchase the funds from your existing brokerage account, so you donât have to open a new account or fill out any paperwork.
Once I created my portfolio, I sent it to my husband so we could talk it over. I think itâs going to serve as a great starting point for a conversation with him about changes⌠and a fantastic starting point for my friends and family, who are just looking to take their first step.
No proprietary technology or asset allocation model is a guarantee against loss of principal. There can be no assurance that an investment strategy based on the Core Builder will be successful. Trading ETFs may result in brokerage commissions and/or taxes. Portfolio gains (if any) must be distributed to shareholders.
In addition to the normal risks associated with investing, international investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume.
Copyright Š Blackrock
