Saturday, August 10, 2013

Investing Smart in Stock Market

Common sense goes a long way in the Stock Market.  Very easy to be caught up in get quick schemes or even risk the house by taking all the equity out to play the uncertain market.

Yet there are ways to keep some "certainty" in one's investments.
One means is noted below in this simple tips!

THE ADVANTAGES OF ASSET ALLOCATION

An asset allocation strategy represents personal decisions about how much of your portfolio to allocate to various investment categories, such as stocks, bonds, cash, and other alternatives.

When stock market returns remain above average for an extended period, investors don't have much interest in
asset allocation. Then, the best strategy seems to be to own only stocks. But when the market declines, investors start looking at asset allocation. Some of the advantages of an asset allocation strategy include:
 Providing a disciplined approach to diversification.
An asset allocation strategy is another name for diversification, an important strategy for reducing portfolio risk.
 Encouraging long-term investing. An asset allocation strategy is designed to control your portfolio's long-term makeup. It should not change based on economic conditions or market fluctuations.

 Reducing the risk in your portfolio. Investments with higher returns typically have higher risk and more volatility in year-to-year returns. Asset allocation combines more aggressive investments with less aggressive ones. This combination can help reduce your portfolio's overall risk.

 Adjusting your portfolio's risk over time. Your portfolio's risk can be adjusted by changing allocations for the different investments you hold. By anticipating changes in your personal situation, you can make those changes gradually.

 Focusing on the big picture. Staying focused on your asset allocation strategy will help prevent you from investing in assets that won't help accomplish your goals. Rather than investing in a haphazard manner, it gives you a framework for making investment decisions.

Courtesy of Al Clark Home Action Newslettter
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