3. Don’t put all your eggs in one basket
Balance, get some in your life. The appropriate mix of securities should represent your goals, current financial situation, and risk. There are typically four categories that you can fall in. You can be conservative, balanced, growth, or very aggressive. I think it is important to first determine exactly what your goals are. As you can see, the conservative mix has historically provided much less growth than a mix with more stocks. Having a significant, age-appropriate, exposure to stocks may, over time, increase your balance at retirement. If you aren’t comfortable choosing stocks and stock mutual funds yourself, consider a target-date fund or managed account. When the target date of the fund is many years away, the portfolio manager tends to invest more aggressively by allocating more to higher-risk investments that offer greater potential for growth, like domestic and international stocks.
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