The single most important step investors can take now

In recent weeks, investors have been inundated with headlines and messaging urging them to stay the course and focus on the long term. But what does that really mean for you and your financial goals?
According to Jim Daniello, CFP®, a wealth management director at TIAA Individual Advisory Services, staying the course doesn’t mean sitting still and doing nothing. In fact, it’s just the opposite.
“The single most important step those in retirement or nearing retirement can take is to meet with their advisor—over the phone or via video conferencing—to revisit their asset location strategy, which will help them determine the levers they can pull now to better protect their assets and their goals,” Daniello said.
Daniello believes that determining which levers to pull and when begins with reviewing the location of your assets.
“The types of challenges savers and investors face today are exactly what the asset location review process is designed to help solve,” he said. “It’s important to remember that while equally important, asset allocation is different from asset location. While asset allocation is about having the right mix of investments in your portfolio, asset location organizes assets by account types based on how you plan to use them, as well as when they’ll be taxed.”
“First, you want to ensure you have the right allocation in place during periods of increased market volatility,” Daniello continued. That’s because over time, market swings can throw your asset allocation—and potentially your risk targets and investment goals—out of balance. When this happens, you can rebalance your portfolio by moving money from investments that take up a greater portion of your portfolio than desired into those that could use a boost—to get back to the initial (or target) asset allocation. Keep in mind, rebalancing does not protect against loss or guarantee that an investor’s goals will be met.
Daniello says that reviewing the location of your assets is also highly beneficial because it helps to ensure:
  • You have the right kind of asset in the right account
  • Each asset has a purpose in your overall financial plan
  • You're using smart strategies to help reduce the impact of taxes and market volatility

Asset location review process


Classify your assets

The first step in an asset location review is to organize your assets by account types and when they’ll be taxed. Using TIAA’s asset location worksheet , you and your advisor can decide if the asset belongs in the “now,” “later” or “never” bucket. For instance, let’s say you have an asset that is taxed before it’s used—investment gains may be impacted. Instead, it may be more efficient to move the asset to a different account to better match when it will be used and taxed.

Identify the purpose of your accounts

Now, it’s time to decide how you'll use your money to pursue your financial goals. You'll likely use different assets for your needs—the essential costs of living that can't be compromised; your wants—things that are important to you, but you might be willing to forgo; and your wishes—your vision for an ideal retirement and legacy.

Locate your assets

Ask your TIAA advisor to conduct an asset location review of your accounts—those you hold with TIAA and any you may hold elsewhere. When the review is complete, you should have a clearer idea of whether your assets are in a suitable location—and if your strategy is as tax smart as it
could be. Consult with your tax advisor prior to making any changes.

Learn more about using asset location to pursue your goals

“By working with your TIAA advisor to complete our asset location worksheet , you can identify ways to avoid locking in losses on long-term investment holdings, which is critical when dealing with turbulent markets,” Daniello said. For example, if you’re retired and typically draw income generated by your investment portfolio, consider if it makes sense instead to draw current income from your emergency savings to minimize investment losses. If you’re still working, an asset location review can help determine if it makes sense to extend your retirement time line and continue working for another year or two as the markets recover.
To learn more about how an asset location review can help you remain on course toward your important goals, contact your TIAA advisor today to schedule time to talk. Your advisor is available to meet with you via phone, web conferencing or email, based on your preferences.

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This material is for informational or educational purposes only and does not constitute fiduciary investment advice under ERISA, a securities recommendation under all securities laws, or an insurance product recommendation under state insurance laws or regulations. This material does not take into account any specific objectives or circumstances of any particular investor, or suggest any specific course of action. Investment decisions should be made based on the investor’s own objectives and circumstances.
Advisory services are provided by Advice & Planning Services, a division of TIAA-CREF Individual & Institutional Services, LLC, a registered investment adviser.