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| Challenges and Diversification |
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This my first time being a Financial Makeover coach and hopefully with Rachelle’s help we can help get the Deisters on the road to financial freedom that I know they want to be on. There are always going to be challenges ahead regarding paying the current bills and paying for the children’s activities that are important to them as well as saving for college and retirement. The Deister family is meeting the challenges head on by getting all the family members involved in the Makeover and monthly budget and each family member is finding a way to help out. I did take a look at Jerome’s 401k that he is currently involved in through his employer and offered some suggestions on how he could allocate his monthly contributions going forward as well as the money that is already in the 401k. One of the most important things when investing is to make sure your money is diversified among different asset classes like large stocks, mid size stocks, small stocks, international stocks and different types of bonds because nearly every year a different asset class might be the best place and also the worst place to be. By being diversified among the different asset classes you can usually help smooth out the volatility and stay away from big drops or losses in your portfolio. For an example, having some money in bonds in 2008 would have helped lessen the losses that people experienced as opposed to being all in stocks. Once you lose money you always have to make back more than what you lost just to get back to even, so the key is to try and stay away from just being in one area of the market that at one point might be the worst place to be in. Jerome was just in a couple of places in the market and was missing out on some potential opportunities. Hopefully this will help lower his risk and at the same time raise his overall rate of return going forward.
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Investments and investment advisory services offered through CUSO Financial Services, L.P. (CFS), an independent broker-dealer and SEC Registered Investment Advisor are Not NCUA/NCUSIF insured, are Not credit union guaranteed and May lose value. CommunityAmerica Credit Union is affiliated with CFS. Financial Advisors are employees of CommunityAmerica Credit Union and registered through CFS. (Member FINRA/SIPC)
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by Randy Pierson, April 12, 2010 at 4:58 PM | Add a Comment |
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