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Investments and Stock Market Volatility
In recent years, the stock
market has hit a series of highs and lows with extreme market volatility.
We have seen drastic increases and decreases and sometimes a combination
of both in the same day. In today’s stock market it can be difficult
to avoid the drama of the current state of the market.
Investing for most of us
should not be a daily stressful experience and should be more focused on
the steady accumulation of our portfolios, rather than on the ups and downs
of the market. An investment plan should be catered to meet the investor’s
personal goals.
The stress of the volatile
stock market can be eased with some planning. For example, diversification
of your portfolio can help to limit your exposure to particular market
segments. Rather than investing 100% of your portfolio in one segment
of the market, investing in different areas
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can
help reduce the volatility. Another diversification tool is re-balancing.
The idea is to re-evaluate your goals and examine your target percentages
in various types of investments. Chances are, over time you may have
drifted from your original plan and may need to re-focus your investment
objectives.
On the other end of the spectrum,
keep in mind that investors can also welcome volatility. When market
prices drop, this can provide an excellent opportunity for buying stocks
at a bargain. As the saying goes… the higher the risk, the higher
the return. Identifying a dip in the market and purchasing that investment
at the key time can turn out to be an excellent bargain.
In summary, investing in
the stock market is usually considered to be a long-term venture in order
to systematically accumulate wealth, but in this volatile market, there
may also be some excellent investment opportunities to watch for.
Planning, establishing goals, and monitoring your investments is the key
to success.
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We
are available to help you with your investment questions and objectives
as well as determining the tax impact of any investment decisions.
Stock
Trading: “Keeping Records and Basis”
As we invest our way into
the new millennium, a majority of people have entered into or maintained
a position in today’s stock market. Whether it’s investing through
local or national brokerage firms or online brokers, trading stocks and
mutual funds have become a part of our every day life. This increase
of investing has become a growing issue for filing an accurate tax return.
What records are important
to maintain from year to year? Outside of the monthly investment
statements and the individual settlement receipts, that fill our mailboxes
on a regular basis and detail our (continued
on next page)
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