Building blocks to guide your long-term investment decisions

The right wealth management decisions for your portfolio depend on your current financial situation, long-term goals and market performance.

“Long-term investing is about navigating possibilities, not certainties. The key is having a well-informed plan that also considers individual goals and risk tolerance.”

 — Anil Suri, Head of Asset Allocation and Portfolio Construction Analytics, Chief Investment Office, Merrill and Bank of America Private Bank

It’s impossible to know the future, but the right financial tools can help provide an idea of how major investments like stocks, bonds and cash might perform over the next 25 years. With this information in hand, it is possible to consider a broad range of potential outcomes and tailor an investment approach to match.

 

The CIO Capital Market Assumptions (CMAs) provide this type of long-term forecast so investors and financial professionals can estimate expected returns and risks. This forecast forms the basis of our Strategic Asset Allocations (SAAs), which offer guidance on investments across asset classes to help support a variety of financial goals while also considering time horizon and risk.

 

These powerful tools provide insight into the actions it might take to meet your short- and long-term goals. They can also inform investment strategies that can help you ensure that you stay on track to meet those goals as economic and market conditions change.

Hard questions that CMAs and SAAs can help answer

What is the potential growth in my wealth?

See your potential growth under various market conditions and at different levels of risk. This provides guidance on how much you may need to save to reach your long-term financial goals.

Will I be able to achieve all of my goals?

Understanding where you are along the path toward funding your long-term goals is important in potentially achieving them. Consider questions like, “Do you need to make up a shortfall in funding, or are your current resources adequate in light of your plans?” and adjust accordingly.

How should I allocate my assets to achieve my goals?

Do you have the right mix of stocks, bonds and cash to achieve your financial goals? Should you consider adjusting your portfolio?

How much should I save for retirement?

Are you saving appropriately for the retirement you have planned? Do you have sufficient savings to consider retiring in the near future, or will you need to adjust your retirement expectations to match the level of expenses that your savings can support?

What can I safely spend in retirement?

Determining personalized sustainable retiree spending rates is critically dependent on CMA forecasts, client’s age and risk tolerance.

The power of a strong foundation

“We believe there is no one-size-fits-all for spending guidance for retirees — it depends heavily on your age and risk tolerance.”

 — Nevenka Vrdoljak, Senior Quantitative Analyst, Chief Investment Office, Merrill and Bank of America Private Bank

Determining which approach is right for you and your family will ultimately be a personal and subjective choice guided by your specific circumstances, priorities and financial situation. A decision of this magnitude can significantly alter your overall financial picture, so it's essential that you consult not only with builders, architects and real estate professionals but also with your advisor and your tax professional who can provide additional insights tailored to your specific needs and circumstances.

 

For more information on CMAs and SAAs, read the Chief Investment Office’s report, “Foundations of Guidance: Capital Market Assumptions and Strategic Asset Allocations.”

 

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Important Disclosures

Investing involves risk, including the possible loss of principal. Past performance is no guarantee of future results.

 

This information should not be construed as investment advice and is subject to change. It is provided for informational purposes only and is not intended to be either a specific offer by Bank of America, Merrill or any affiliate to sell or provide, or a specific invitation for a consumer to apply for, any particular retail financial product or service that may be available.

 

The Chief Investment Office (“CIO”) provides thought leadership on wealth management, investment strategy and global markets; portfolio management solutions; due diligence; and solutions oversight and data analytics. CIO viewpoints are developed for Bank of America Private Bank, a division of Bank of America, N.A., (“Bank of America”) and Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S” or “Merrill”), a registered broker-dealer, registered investment adviser and a wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”).

 

Bank of America, Merrill, their affiliates and advisors do not provide legal, tax or accounting advice. Clients should consult their legal and/or tax advisors before making any financial decisions.

 

All recommendations must be considered in the context of an individual investor’s goals, time horizon, liquidity needs and risk tolerance. Not all recommendations will be in the best interest of all investors.

 

Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

 

Investments discussed have varying degrees of risk. Some of the risks involved with equities include the possibility that the value of the stocks may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the U.S. or abroad. Bonds are subject to interest rate, inflation and credit risks.

 

Alternative investments are speculative and involve a high degree of risk.

 

Alternative investments are intended for qualified investors only. Alternative Investments such as derivatives, hedge funds, private equity funds, and funds of funds can result in higher return potential but also higher loss potential. Changes in economic conditions or other circumstances may adversely affect your investments. Before you invest in alternative investments, you should consider your overall financial situation, how much money you have to invest, your need for liquidity, and your tolerance for risk.

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Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value
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Investing involves risk. There is always the potential of losing money when you invest in securities. Past performance does not guarantee future results. Asset allocation, diversification and rebalancing do not ensure a profit or protect against loss in declining markets.

Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.

This material is not intended as a recommendation, offer or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. Additional information is available in our Client Relationship Summary. 

This material does not take into account a client’s particular investment objectives, financial situations, or needs and is not intended as a recommendation, offer, or solicitation for the purchase or sale of any security or investment strategy. Merrill offers a broad range of brokerage, investment advisory and other services. There are important differences between brokerage and investment advisory services, including the type of advice and assistance provided, the fees charged, and the rights and obligations of the parties. It is important to understand the differences, particularly when determining which service or services to select. For more information about these services and their differences, speak with your Merrill financial advisor.

Merrill Lynch, Pierce, Fenner & Smith Incorporated (also referred to as “MLPF&S” or “Merrill”) makes available certain investment products sponsored, managed, distributed or provided by companies that are affiliates of Bank of America Corporation (“BofA Corp.”). MLPF&S is a registered broker-dealer, registered investment adviser, Member SIPC and a wholly owned subsidiary of BofA Corp.

Insurance and annuity products are offered through Merrill Lynch Life Agency Inc., a licensed insurance agency and wholly owned subsidiary of Bank of America Corporation.

Trust, fiduciary and investment management services, including assets managed by the Specialty Asset Management team, are provided by Bank of America, N.A., Member FDIC and wholly owned subsidiary of Bank of America Corporation (“BofA Corp.”), and its agents.

Bank of America Private Bank is a division of Bank of America, N.A.

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Banking products are provided by Bank of America, N.A. and affiliated banks, Members FDIC and wholly owned subsidiaries of Bank of America Corporation.

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Patent: patents.bankofamerica.com

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