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ProActiveFinancialPlanning.com |
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The Financial Planning Center Comprehensive Financial Planning
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How to Manage Your Investment Risk |
Conclusion
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Common Investment Mistakes or Poor Investment Decisions?
Diversification vs. Asset Allocation-Managing Investment Risk Hope for the Best but Plan for the Worst Summary |
Suggestions—Investors should seek institutions that offer the
highest level of service and resources for the least possible cost.
Don’t limit your investment options to a single investment. Have the options to invest in bonds, stock, unit investment
trusts, both load and no-load mutual funds, etc. Avoid investing with a single mutual fund family that is
biased towards investing in their own funds and opt for a mutual-fund
supermarket that covers multiple fund families at a low or preferably
no cost. Planning your
financial future is serious business.
Don’t risk your life savings.
The difference of only a 1% return each year on your
investments can mean the difference of thousands if not hundreds of
thousands of dollars in the long run. Seek the advice and direction of a licensed
professional in his or her perspective fields such as investments,
taxes, insurance, law, and financial planning and compare costs.
Establish financial goals and know your risk tolerance.
Minimizing risk while maximizing returns should be the goal of
every investor. Understand
the impact of compounding at different rates of return will produce
dramatically different results on the future value of your portfolio.
This is a very important concept many investors fail to
conceptualize. Always
factor in the effects of taxation on any investment decision.
Inflation deteriorates the purchasing power of a dollar over
time. If inflation
continues to average 3.1% a year, any investment with a lower rate of
return will not increase your wealth.
Take advantage of any tax-advantage accounts before investing
in taxable accounts. If you do invest in stocks, do it with funds you
can afford to lose both physically and mentally.
The more knowledge you possess, the better off you will be. Always ask questions. This module is available by email in a seven-page, printable version upon request. Contact ProActive Financial Planning to Request. |
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