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Investing Strategies Whatever you hope to achieve by investing, it’s critical to have a clear picture of your goals so that you can develop a strategy for reaching them. People invest for a lot of good reasons:
Before you invest, you need to ask yourself what you want to accomplish. You need to consider your time frame for each investment and how much risk you are willing to take. Short-term investing generally means you want to be more conservative with your investments (investments such as money markets, Certificates of Deposit, Treasury bills, U.S. government and agency securities and other highly liquid and low-risk securities). Long-term investing generally gives you the opportunity to invest for higher returns by taking on more risk (investments such as stocks that fluctuate more in the short-term but historically have provided higher returns). Diversification is a basic principle of successful investing. It involves investing in different assets classes (cash, bonds, stocks, etc.), and different investment vehicles. Diversification does not guarantee against loss, but is a method used to help manage investment risk. Asset Allocation is a systematic approach to diversification that determines an efficient mix of assets for a given investor, based on his or her individual needs. Finding an appropriate mix of investments for an individual’s risk profile, financial needs, and time horizon may require careful calculation and the benefit of professional guidance. |