For starters, you can’t rely too heavily on fixed-rate investments, such as bonds and certificates of deposit, because these vehicles may not keep pace with the inflation rate.
To stay ahead of inflation, you’ll need to invest for growth and rising income, both of which you may be able to get through dividend-paying stocks. Some of these companies have actually increased their dividend every year for 20 or 25 years. Keep in mind, though, that dividends can be increased, decreased or eliminated at any time without notice. Still, by owning some of these stocks, along with a mix of other investments that are appropriate for your needs, you can help yourself fight the very powerful effects of inflation.
“Balance” Is Key To Successful Investing
In most parts of our life, we seek a healthy balance. But sometimes we let our investment portfolios get out of balance - and that can be a costly mistake.
How can your portfolio become unbalanced? Suppose, for example, that you initially established an investment mix of 50 percent stocks and 50 percent bonds, a ratio that reflected your risk tolerance and time horizon. But over time, perhaps an extended bull market drove up the value of your stocks so that they now make up nearly 80 percent of your portfolio - a percentage that may be a little bit too risky for you.
To prevent this from happening, you should consider periodically rebalancing your portfolio. This may involve scaling back on one type of asset and adding more of another.
A balanced portfolio can help you achieve your long-term financial goals - so don’t forget to rebalance your portfolio regularly.
Contact Wendell at Edward Jones www.edwardjones.com.
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