Diversify and Stay Calm

The unknown can be scary, especially when it comes to your finances. You don’t have a crystal ball, but you do have one tool in your financial toolbox that may help cushion your portfolio against any market fluctuations: Diversification.*

Diversification Defined

Diversification means spreading your investment dollars across several different asset classes. Investing in a variety of asset classes may potentially reduce your portfolio’s volatility and minimize your risk of loss. Setting and maintaining your strategic asset allocation are key for your long-term investment success. Review your portfolio annually or whenever your circumstances change and rebalance your asset mix, if necessary.

The Basic Components

A diversified portfolio typically includes these basic asset classes:

Stocks offer higher growth potential than other asset classes. But stock values can be volatile, resulting in a greater risk of losses.

Fixed income investments (bonds) provide income from interest. Bonds may reduce your portfolio’s volatility and help cushion losses when stock values lose ground.

Cash equivalents consist of short-term, low-risk investments. They preserve principal while earning interest at typically low rates. They also offer stability and relatively easy access to your cash.

A Step Beyond

Diversification doesn’t stop with the three major asset classes. International stocks give you exposure to foreign markets. Sector stocks focus on specific industries or areas of the economy. Including these investments can further diversify your portfolio.

Your financial professional can help you select a diversified portfolio of investments that complement your goals and risk tolerance.

*Diversification cannot eliminate the risk of investment losses. Past performance won’t guarantee future results. An investment in stocks or mutual funds can result in a loss of principal.