A 3-Step Asset Allocation Approach
Perhaps the most important move you can make for your investments is to properly diversify your portfolio. By investing in a mix of stocks, bonds, and cash, you’ll reduce the risk of a significant loss. How you combine your diverse mix of investments is called your asset allocation.
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Make Pension Decisions Carefully
In the past, a retiree typically received a monthly pension check and Social Security benefits. Now, it’s not uncommon for a retiree to have a pension plan, a couple of 401(k) plans, some individual retirement accounts (IRAs), personal savings, possibly some deferred compensation, and maybe an annuity. Deciding how to handle all those different income sources in the most advantageous manner is a daunting task.
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Teaching Investment Basics to Your Children
A very common reason for investors to focus on their portfolios is because of the next generation: they want to ensure that their children are well taken care of so that they, the investors, don’t have to worry later in life. Taking it another step is to teach your children about investing. This is a golden opportunity to start them on a solid financial path.
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Reevaluate Your Life Insurance at Retirement
As retirement age approaches, it’s usually a good time to reassess your life insurance policies to see if your needs have changed. With your children on their own and no earned income to replace, you may no longer need a large life insurance policy. Especially if your insurance premiums are high, you may be tempted to cancel the policy, take the cash surrender value, and enjoy retirement.
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The Fundamental Investing Principle
The whole point of an investment program is to accumulate sufficient funds to meet your financial goals. So what is the most fundamental investment principle — selecting the proper investments, accumulating the correct combination of assets, timing the market to avoid corrections? Actually, the principle may not even sound like an investment principle at all.
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