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A Balancing Act: Why Rebalancing is Important

Rebalancing is the action of periodically buying and selling assets in your portfolio to maintain your original desired target asset allocation-an important step in controlling risk. You will find that some of your investments may grow faster than others as the market fluctuates. If the portfolio is not rebalanced, it may result in an undesirable exposure to risk.
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Diversification: You May Not Be as Diversified as You Think

Diversification aims to maximize return by investing in different areas that would each react differently to the same event -investments that are not correlated with each other. For example, if you purchased three airline companies, that is not much different than only purchasing one, as the factors that affect the price is much the same. If the airline pilots go on strike and all flights are canceled, share prices of airline stocks will drop and your portfolio will experience a noticeable drop in value.
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Dollar Cost Averaging

Dollar Cost Averaging (DCA) is the idea of buying a fixed dollar amount of an investment on a regular schedule regardless of the share price. DCA allows for an investor that has a large sum of money to invest a portion of it over time until it is all invested in the stock market. This is not to be confused with constant dollar investing where the investor does not have a lump sum and wants to contribute a specific dollar amount on a systematic (e.g. monthly) basis.
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Misconceptions About IRA Accounts

I Am Going To Receive Social Security, So I Don’t Need An IRA: The U.S. Department of Labor stated that on average, Social Security pays retirees only 40% of their pre-retirement earnings. In order to maintain your pre-retirement lifestyle, you will probably need additional savings or investments to draw upon.
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 Modern Portfolio Theory

A theory, pioneered by Harry Markowitz, on how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. The goal is to identify your acceptable level of risk tolerance, and then to find a portfolio with the maximum expected return for that level of risk.
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Risk & Reward

The financial meltdown of 2008-2009 left many investors re-evaluating their investment strategy. Many people decided that they were not indeed the “risk adverse” investor that they thought themselves to be and transitioned their portfolio to lower risk investments. Every investment strategy carries risk. There are two distinct types of risk that you should consider when investing: Investment Risk & Inflation Risk.
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The Investors’ Dilemma

The Investors’ DilemmaTM is a cycle that explains why many investment decisions are driven by emotional and psychological bias consistent with your values and goals. On the one hand, investors want assets to grow to an ideal state – to have enough wealth accumulated to meet personal financial goals. Yet, for most, this will only happen by investing money prudently. Therefore, investors need to make decisions and select strategies to maximize investments year after year. Unfortunately, the actions investors frequently take are likely to be self-defeating. Let’s look at how each step of this counterproductive cycle interferes with an investor’s ability to develop and maintain an ideal investment strategy.
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Timing Isn’t Everything

While market timing, on the surface, may appear to be a quick way to increase your portfolio returns, time (not timing) is a better approach. That means staying invested for the long haul.
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To Roth or Not to Roth? That is the Question.

A Roth IRA (Individual Retirement Account) is a special type of retirement plan that is a powerful, “tax advantaged” investment product. The number one benefit of the Roth IRA is that individuals are able to grow and withdraw their wealth tax free.
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What Active Management Has Taught Us

Active Management: Tries to distinguish stocks that will perform better-that is will have higher future rates of return-than other stocks in the market. *Identifying funds that did well in the past is not a reliable method of indicating which funds will do well in the future.
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What Are You Waiting For?

Experts estimate that you’ll need at least 70% of your pre-retirement income to maintain the same standard of living once you stop working. For most people, Social Security alone will not provide this level of income. Some workers may have pension plans that will provide additional income in retirement. Increasingly, however, many workers do not have access to traditional pension plans and instead must rely on their own savings to provide for their financial needs in retirement.
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