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A retirement account is only as good as the chosen investments. Investors have so many options when purchasing stock, that it can be overwhelming to make a wise decision that will allow a retirement account to grow without experiencing significant decreases. Some losses are unavoidable, but others are caused by investments that are made on imperfect knowledge. Before determining the best retirement asset allocation, be sure to consider the following. These tips can help buffer against predictable market shifts, and ensure an investor has the money they need to retire when the time approaches.
Avoid Overlapping Investments
One of the riskiest stock market purchases any investor can make is placing too much money in one company or a single industry. It is important to research the various stocks available and ensure that no more than 10 percent of an investment account is in a given sector. This helps reduce the severity of losses should one sector experience a market upheaval, and can act as a buffer against losses if market prices experience an unexpected decline.
Determine Growth Objectives
The first step in establishing an Asset Allocation Strategy is to identify the growth objectives of a retirement account. Long term growth investments are typically more stable but provide smaller returns. Individuals looking for quick growth can benefit from a more risky portfolio that offers increased returns, but with a greater opportunity for losses. To determine which stocks are best for an individual's growth objectives, they should start by tracking the investments history and determine if it is better suited for long or short term gains.
Know When To Buy And Sell
A key factor in successful Asset Allocation is knowing when to buy and sell. The biggest mistake most investors make is selling due to fear and panic. A knee jerk reaction of this nature can cause an investor to lose money. In situations when the market is in a decrease pattern, it is best to stay the course and allow investments to rebound before making a change. A time of market turmoil can be a perfect time to buy additional stock, as it allows an investor to purchase shares for a reduced amount and increases the propensity for greater returns.
These tips are just the beginning to achieving Top Investment Allocation Results. For more information on establishing a stable retirement account, be sure to contact Linden Thomas and Company. Their team of experienced investors can help anyone prepare for retirement, and mitigate some of the risk associated with the stock market. Contact them today to learn more and take control of the future once and for all.
This project was last updated 4 months ago