When you think about a well-balanced investment portfolio, you might picture a pie chart or a spreadsheet of asset classes. Gregory Ricks, in his book Retirement Deserves a Helpful Hand: A Guide to the Destination You Deserve, offers a simple and visual way to understand portfolio diversity: The Color of Money.
Just like a painter blends primary colors to create a spectrum, investors blend different categories of assets to create a portfolio that fits their needs and goals. The three primary colors, or categories, in this concept are:
RED: Growth
Growth investments are designed to help your portfolio increase in value over time. They have higher potential for returns but also carry higher risk.
Examples include:
- Stocks and equities
- Exchange-traded funds (ETFs)
- Mutual funds
- Corporate bonds
- Real estate investment trusts (REITs)
- Speculations and alternative investments
Think of red as bold and energetic. It can drive your portfolio’s growth, but may also create volatility.
YELLOW: Liquidity
Liquidity represents money that is easily accessible and safe from market swings. While it typically offers little to no growth, it plays an important role in giving you flexibility and security for short-term needs.
Examples include:
- Cash
- Money market accounts
Think of yellow as bright and ready. It is available when you need it for emergencies, opportunities, or planned expenses.
(For tips on growing your yellow category, read this article: Invest Time, Not Just Money: A Mindset Shift for Reaching Your Financial Goals)
BLUE: Protection
Protection-focused investments are designed to preserve your principal while offering stability. They may grow more slowly, but their main role is to keep your money safe from major losses.
Examples include:
- Certificates of deposit (CDs) backed by banks
- Government bonds backed by the U.S. Government
- Life insurance policies backed by insurance companies
- Annuities backed by insurance companies
Think of blue as steady and calming. It helps maintain your financial foundation even when markets are turbulent.
Blending the Colors
Few investments are purely red, yellow, or blue. Many have characteristics of more than one category, just like colors mix to form green, orange, or purple. For example:
- A diversified mutual fund may offer both growth and protection, but still has a higher degree of risk, which could be considered a “purple” investment.
- Certain annuities may provide protection while offering modest growth, giving them a blue tone with some red.
- Some corporate bonds may have both growth potential and liquidity, which could make them appear more orange.
Each investment has its own mix, and the key is how they work together in your portfolio.
Why the Colors Matter in Retirement Planning
Understanding the “color” of your money can help you:
- Identify imbalances in your portfolio
- Avoid being overly concentrated in one type of risk
- Match your investments to your retirement timeline and financial needs
- See how each asset supports your long-term retirement strategy
The goal is not to choose only one color. The goal is to find the right blend for your unique situation.
Your Retirement Palette
The Color of Money concept shows that building a diverse portfolio is much like creating a painting. You begin with the primary colors, growth (red), liquidity (yellow), and protection (blue), and blend them in a way that reflects your vision for the future.
The result is a personalized financial “work of art” that supports your goals, aligns with your comfort level for risk, and evolves as your needs change.
Understanding which investments belong in each category may help you see the full picture more clearly. Like an artist stepping back to evaluate their canvas, you can review your portfolio, make adjustments, and ensure your retirement strategy remains vibrant, balanced, and positioned for long-term success.
And just as artists benefit from feedback of a trained eye, one may find valuable insight by working with a trusted financial professional. Their perspective may help you recognize the strengths and potential blind spots in your portfolio, allowing your final “painting” to reflect both your vision and confidence in your financial future.
If you would like help crafting your ideal “retirement palette,” schedule a free consultation with our knowledgeable team of advisors today. If you would like a complementary copy of Gregory’s book, give our office a call at (504) 832-9200. As always, we’re here to help.
The free consultation provides an overview of products and services offered by Gregory Ricks & Associates. Investment advisory services made available through AE Wealth Management, LLC, a Registered Investment Adviser, and there is no obligation.
This article is meant to be general and is not investment or financial advice or a recommendation of any kind. Please consult your financial advisor before making financial decisions. For more detailed information, contact a financial advisor with Gregory Ricks & Associates, Inc. Investment advisory products and services through AE Wealth Management, LLC. (AEWM) Insurance products are offered through the insurance business Gregory Ricks & Associates, Inc. AEWM does not offer insurance products. The insurance products offered by Gregory Ricks & Associates, Inc. are not subject to Investment Adviser requirements. Firm does not offer tax or legal advice. 3204661 – 8/25