Protecting Your Assets
Investing is all about balancing potential risks and rewards.
How much risk can you tolerate?
Your investment profile (aka investing style) is where you fall in the spectrum of risk and reward. Investors range from risk-adverse to conservative, moderate or aggressive.
Your investing style is influenced by factors such as age, gender, income, assets, family make-up and tax bracket. It also accounts for subjective factors, such as desired returns on investments and your feelings about potential losses.
In general, conservative investors normally take less risk and see smaller returns over long periods of time. Aggressive investors are willing to risk losing money for the potential of greater returns.
If you're already an investor, you know that market conditions change over time and some investments outperform others.
Professionals recommend that you choose a variety of investments to mitigate your risk no matter where you fall on the risk spectrum. Diversification helps you balance the risks and rewards of the asset classes and the investment within the asset class itself.
You can diversify using asset allocation. That means you spread your money among three major asset classes: stocks, bonds and cash equivalents. You can further diversify by choosing a variety of investment options within each asset class.
Talk with your investment professional for help in determining your investment style, objectives and time horizon.
Your investment professional can also help you diversify your mix of investments. With diversification you may be better able to ride out the ups and downs of economic cycles and limit risks to your portfolio while seeking the growth you want.
Keep in mind, diversification is an investment strategy. It doesn’t assure a profit or guarantee against loss in a declining market. Investing involves market risk, including the possible loss of principal.