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Diversification means: Don't put all your eggs in one basket. Investment experts say it is safer to invest in a number of different instruments. There are also certain advantages in investing gradually rather than all at once, i.e., don't invest all your money in one shot. These are two basic strategies that can help you to reduce the risk in your retirement portfolio. These two strategies can be accomplished by saving through your company's retirement plan, where you contribute money gradually through payroll deduction and you have the opportunity to invest in different funds.
This strategy of systematically investing a fixed dollar amount over time is called dollar-cost averaging. For example, if you have $1,200 to invest in your retirement program this year, you would invest $100 per month instead of investing the whole $1,200 at the beginning of the year. The benefit of dollar-cost averaging is that it may reduce the risk of buying shares at the wrong time, e.g., when stock prices are high. With this strategy, you tend to buy fewer shares when the price per share is higher and more shares when the price per share is lower. Dollar-cost averaging works in your favor because the average price per share that you end up purchasing is typically lower.
Securities and Investment Advisory Services are offered through LPL Financial, a Registered Investment Advisor, member FINRA/SIPC. Insurance products are offered through LPL Financial or its licensed affiliates. Heartland Planning Associates is a trade name of Heartland Bank. Heartland Bank and Heartland Planning Associates are not a registered broker/dealers and are not affiliated with LPL Financial. The investment products sold through LPL Financial are not insured Heartland Bank deposits and are not FDIC insured. These products are not obligations of Heartland Bank and are not endorsed, recommended or guaranteed by Heartland Bank or any other government agency. The value of the investment may fluctuate, the return on the investment is not guaranteed, and loss of principal is possible. The LPL Financial representatives associated with this website may discuss and/or transact securities business only with residents of the following state: Ohio. Check the background of investment professionals associated with this site on FINRA's BrokerCheck.
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