Henry Yoshida is CEO of Rocket Dollar, helping Americans unlock retirement funds with Self-Directed (S-D) IRAs and S-D Solo 401(k) plans.

One feels a certain freedom when one can take advantage of opportunities, whether they are investing-related, opportunities to take a spontaneous trip, or have the flexibility to do with your time what you want.

Having the flexibility to take advantage of opportunities as they arrive is critical in building a diversified portfolio and getting the best returns possible. If you are patient in jumping into opportunities, you can wait for the suitable investment—not just what is available at that specific moment.

Investment Flexibility—Responding To Market Changes

Whether you are investing inside a retirement account or making investments using cash, it is important to be able to respond to changing market conditions and adjust your strategy based on changes in your own life.

Markets are constantly changing around the world, and having flexibility within your portfolio and being able to respond to market changes quickly can save you from being exposed to a poorly performing asset class and allow you to reallocate money quickly, depending on your risk tolerance and goals.

Even though some investments are illiquid and require hold periods of five to 10 years, that is not to be confused with the flexibility to invest in those assets in the first place—especially inside a retirement account, which can often be limited to mutual funds, stocks or bonds.

Responding To Lifestyle Or Personal Changes

Our lifestyle changes may require adjusting our investment goals, time horizons or risk tolerance. Whether lifestyle changes are planned or not, your portfolio needs to be as flexible as we sometimes have to be.

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Flexibility in your portfolio can alleviate a lot of the stress associated with major life changes, whether it’s the birth of a child, a grown son or daughter moving back home, death, divorce or any of the changes we often encounter in the course of our lifetimes. It’s important to be able to respond accordingly with our investments.

When It Comes To Investing, Flexibility Is A Good Thing

When it comes to a long-term financial strategy, flexibility is essential. Flexibility allows you to make the most of your money and invest in the most appropriate assets for your own goals and risk tolerance.

When investing long-term, we all want our investments to grow steadily over time while allowing us to feel that we could access that money if there were unforeseen circumstances. While some investors may want to keep their investment in a cash reserve until they need it, this limits how much can be gained from compound interest over time because it is not invested in productive assets like stocks or real estate.

Using retirement funds for long-term or illiquid investments can also free up cash for shorter-term investments or more liquid investments. Those funds can be used for immediate lifestyle needs, or for emergencies that exceed your emergency fund.

Conclusion

Overall, investment flexibility is essential for investors who want to build a diversified portfolio tailored to their needs and goals, while responding to market changes and mitigating risk.

Ultimately, every investor has different needs, risk tolerance and lifestyles. A personalized portfolio to suit your needs and goals is the most important thing when considering your financial future.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

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