Securities arbitration claims over “suitability” are some of the most common claims filed each year. Advisors and brokers are required by law to recommend only suitable (or appropriate) investments to their clients. One major factor in determining suitability is the investor’s specific financial goals and the investor’s desired timeline for meeting those goals.
Short-term goals are goals that are less than three years away. These include things like saving for an upcoming vacation or a down payment on a house you intend to buy in the next two years. These short-term goals require a short-term investment strategy.
“Because you plan to spend the money you set aside for short-term goals relatively quickly, you'll want to focus on safety and liquidity rather than growth in your short-term portfolio,” advises FINRA. Otherwise, your investments might fall sharply just when you need the funds.
Insured bank or credit union accounts, Treasury bills backed by the government's promise to repay, money market accounts/funds, and other low-risk investments that pay interest are all good bets for short-term investments.
Most investors, however, are saving for retirement or their children’s college funds. These are usually long-term goals that require a long-term investment strategy.
“For many investors, that can mean allocating most of the principal you set aside for long-term goals to growth investments, such as individual stock [and] stock mutual funds,” says FINRA. “While past performance is no guarantee of future results, historical returns consistently show that a well-diversified stock portfolio can be the most rewarding over the long term … when you have 15 years or more to meet your goals, you have a good chance of being able to ride out market downturns and watch short-term losses eventually be offset by future gains.”
If you believe your broker or advisor has recommended you purchase an investment that is unsuitable for you based on your financial goals and timelines, please speak with an investment misconduct lawyer for a free evaluation of your case. You can also receive a FREE copy of our book Five Signs of Investment Fraud…And What to Do if It’s Happened to You by giving us a call or filling out the online contact form on this page.
To learn more about building your portfolio based on your financial goals, read FINRA’s “Investing for Different Time Periods.”
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Meyer Wilson represents individuals across the country who have been harmed by investment fraud. All of our cases are handled on a contingency fee basis and we never request a retainer of any kind. Contact us for more information or complete the online form on the top of this page and we will respond promptly.