Navigating the Markets
Should you adjust your investment strategy to keep up with the bulls or bears?
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In that case, it's important to build a portfolio with longevity in mind. "Markets change, and they can change quickly," Schieler says. "Diversification and dollar cost averaging are long-term strategies for any market." For effective diversification, your portfolio should have a twofold strategy: enough equities to help you realize gains when markets rise, and enough additional holdings such as bonds and cash to withstand stock market volatility.
Additionally, Schieler recommends a simple approach called dollar cost averaging—continuously adding small amounts to your investments by setting up an automatic investment plan (AIP). By investing small amounts, you purchase more securities when prices fall and less when they are high.
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Asset allocation, diversification and automatic investment plans do not assure a profit or protect against loss.
Bonds are subject to interest rate risk and may decline in value due to an increase in interest rates.
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Securities are not FDIC insured, are not bank guaranteed and are subject to investment risk, including possible loss of principal.
Neither State Farm nor its agents provide investment, tax, or legal advice.
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