55 years old - but just getting in to ETF's

At 55 years old, considering your approach to building an ETF portfolio that balances growth potential with risk management is crucial, especially as you near retirement. Given your timeline, it’s important to focus on a strategy that aligns with your retirement goals, risk tolerance, and how actively you want to manage your investments.

1. Assess Your Risk Tolerance and Retirement Goals: At this stage, you might prefer a mix of growth and income-focused ETFs. Growth ETFs can help your portfolio appreciate in value over time, while income-focused ETFs, like those that invest in bonds or dividend-paying stocks, can provide regular income and help reduce volatility.

2. Choose a Suitable Asset Allocation: Considering your proximity to retirement, a balanced approach might be suitable. This typically involves a mix of stocks and bonds. For example, a ⁶⁰⁄₄₀ split between stocks and bonds is common for those seeking both growth and stability. However, the exact allocation can vary based on how comfortable you are with risk and your specific financial needs.

3. Diversification: Ensure your ETF portfolio is diversified across different asset classes and geographies. This can help manage risk and reduce the impact of volatility in any single market or sector. For instance, you might include international equity ETFs, domestic stocks, and bonds.

4. Consideration of Time Horizon: With potentially 10 years or more until retirement, you have some time to recover from market dips. However, as you get closer to retirement, you might want to gradually shift towards more conservative investments to preserve capital.

5. Regular Reviews and Adjustments: It’s important to review your portfolio regularly and make adjustments as needed. This could be in response to changes in the market, your financial situation, or as you get closer to retirement.

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Hey Scott,

Good question. There are some important things to consider when starting to invest at a later stage. I wrote an article about that here which you might find useful: https://pearler.com/explore/learn/blog/invest...

Hope it helps.
Dave