You Need to Guide a Long-Term Investment Strategy
You need to use long-term strategic investment guidance when choosing the ratio of your money invested in stocks versus bonds. The right answer depends on several factors including your level of experience, age, and the investment philosophy you intend to use. Most people benefit from a long-term investment strategy.
Moderate Investment Guidelines for Aggressive Activity
If you are targeting a long-term return rate of 8% or higher, you should allocate 80% of your portfolio to stocks and 20% to cash and bonds. In this case, you can expect your portfolio’s value to decrease by 20% at some point in time. It is best to rebalance this mix once a year.
Moderate Growth
If you are targeting a long-term return rate of 7% or higher, keep 60% of your portfolio in stocks and 40% in cash and bonds. With this mix, you may experience a decrease in your portfolio’s value of 20% within a year or period. It is best to rebalance the portfolio once a year.
Conservative
If you want to preserve your capital rather than earn higher returns, do not invest more than 50% in stocks. You may experience volatility with this approach and could see a decrease in your portfolio’s value of 10% over a year or period.
Retirement Considerations
The models mentioned above provide you with guidance if you have not retired yet. They aim to achieve high returns while minimizing risks. They may not be suitable for you when you move into retirement. After that, you will need to make regular withdrawals from your savings and investments.
Frequently Asked Questions
– How can you determine the ratio of stocks to bonds in your portfolio?
– Are bonds safe in the event of a stock market collapse?
Source: https://www.thebalancemoney.com/how-much-of-my-money-should-be-in-stocks-vs-bonds-2388518
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