Stocks Are On A Roll, Should You Go All In?
The headlines since January 1st have been indicating that stocks are rallying and bonds are flagging seriously behind. As a result, many investors have been questioning their investment decisions wondering whether or not they should rearrange their portfolios and go “all in” to stocks.
While it is true that stocks due provide a bigger return on investment than more conservative investment choices, greater profitability must also be coupled with the amount of risk involved. Meaning, even though stocks have greater potential to earn income, they also create a riskier environment for your investments. For example, stocks are going up right now, but there have been times historically when stocks have been down. From 1999-2008 stocks lost 13% of their value. Also, there are other times in history when stocks have underperformed compared to bonds for 10 or even 20 years. So basically, it’s not a given that stocks will continue to outperform other investments.
Stocks Are A Great Option, But Hedging Your Portfolio Is A More Balanced Investment Approach
While it is likely that stocks will continue to outperform bonds for at least some time, it still pays to hedge yourself in, by having a well-balanced portfolio from a variety of different investment vehicles. If you’re unsure of the right “mix” of investment choices, speak to a Redhawk advisor near you today about how to adequately allocate your assets according to your life stage and risk tolerance. A general rule of thumb to follow is that the closer you are to retirement age, the less risk you should have in your portfolio.
Like anything in life, investing requires balance. Putting all your eggs in one basket could leave you without a nest egg when the time comes for you to retire. Do yourself a favor and gather information now, by speaking to a financial advisor near you, before you move forward with your investment decisions.