When choosing a strategy to build your retirement portfolio, you’ll have to factor in such elements as your life expectancy and how much principal you need to preserve, according to investment research firm Morningstar. You’ll also need to consider where your retirement income will come from, whether that be IRAs, 401(k)s, Social Security, pensions, dividends or other sources.

But there’s another important consideration: Your risk tolerance. How you answer that question, according to the AARP, may dictate your retirement strategy:

  • Aggressive: This approach is for those who don’t fear the unknown: People who diversify their portfolios but put a part of their funding into turbulent products. This approach could lose money or make a profit.
  • Cautious: People who engage in this strategy still take on some risk — by putting a majority of their money into stocks, for example. But aside from capital growth, they also pursue income and preservation of principal. This type of strategy might be right for someone nearing or just starting retirement.
  • Risk-Averse: This strategy is pursued by anyone who can’t (or won’t) risk losing any principal. This type of portfolio preserves capital and offers some protection against inflation.

Whatever your retirement strategy, Ally offers several types of IRAs. Deposits in our IRA CDs are FDIC-insured and offer predictable interest rates.

What kind of retirement strategy do you have? Do you consider yourself aggressive, cautious or risk-averse with your finances?