|1.||Know what you're investing for.|
|2.||Make paying yourself a priority.|
|3.||Make tax-smart investments.|
|4.||Diversify your portfolio.|
|>||Understanding the various asset classes|
|>||Establishing the right asset allocation mix makes all the difference|
|>||Diversify within each asset class Stocks|
|>||Diversify within each asset class Bonds|
|>||Take the long view|
Deciding how to allocate your assets is an important investment decision.It's your asset allocation that really determines how your portfolio will perform in the long run. Remember, it's critical to establish an asset allocation plan, and it's just as critical to maintain one over time.
See why it's important to rebalance your portfolio over time.Have you looked at your portfolio lately? Unless you monitor and adjust your portfolio periodically, your mix of assets can shift out of balance. For example, after a strong market for stocks, your allocation in bonds will likely be too low relative to stocks, leaving your portfolio more aggressive than you intended.
Asset allocation and diversification do not assure or guarantee better performance and cannot eliminate the risk of investment losses.
Stock values fluctuate in response to the activities of individual companies and general market and economic conditions. Bond values fluctuate in response to the financial condition of individual issuers, general market and economic conditions, and changes in interest rates. In general, when interest rates rise, bond values fall and investors may lose principal value. Some funds, including nondiversified funds and funds investing in foreign investments, high-yield bonds, small- and mid- cap stocks, and/or more volatile segments of the economy, entail additional risk and may not be appropriate for all investors. Consult a fund's prospectus for additional information on these and other risks.
Next: Take the long view.