By Debbie Placke, Vice President, Manager, Financial Planning Tools and MarketingPrint This Post
The Stock and Bond Markets fluctuate up and down daily. Some days the waves are bigger than others, and some investments shoot up and down further than others. Do you have a long-term plan in place to help you ride out the volatile markets?
Timing the market and knowing the perfect time to buy and sell securities is next to impossible. Predicting what will happen is impractical. Having a diversified portfolio asset allocation is so important for portfolio performance. This is why a long-term plan is necessary.
Looking back just over the last 5 years, the major players in the market have finished all over the board.
If you have all your money in one investment vehicle you are taking a much higher risk than if you have a good mixture of asset classes. A variety of crises and events can affect market fluctuations. The best performing securities one year can quickly fall to the bottom with one announcement or event. Since we don’t know what the future holds, having your investments spread out between stocks, bonds and cash, as well as a mix of investments within the asset classes and sub-sectors for each of those categories is important to level out the big waves of the market, and maintain a much smoother ride. Market declines create opportunities for long-term investors and rebalancing your portfolio can help to increase your nest egg.
Asset allocation/diversification cannot guarantee a profit nor protect against loss in a declining market. Talk to your Benjamin F. Edwards & Co. financial advisor about your long-term plan and make sure that you are diversified to help have a smoother ride to retirement.