Stay the Course

Even the most confident investors might be rattled by recent Wall Street woes combined with unstable oil prices and an unpredictable economy. And while current market fluctuations may tempt you to focus less on your portfolio and more on your pocketbook, the best strategy may be to continue managing your investment strategy and stay the course.

Time, not timing, is key
 

Predicting the market is not like predicting the weather. There are no high-tech gadgets or radar systems to predict the highs and lows that may lie ahead. Without knowing the exact moment to buy or sell, it is easy to miss the market, which could prove costly. Generally, sticking to a well thought out investment strategy is one of the best ways to benefit from long-term market performance. Remember, past performance doesn’t guarantee or predict future returns.

Asset allocation
 

Asset Allocation is a strategy that spreads your investment options around. This approach seeks to take advantage of the potential benefits offered by stocks, bonds, and other asset classes, while helping to reduce downside risks. Although asset allocation cannot guarantee a profit or offer complete protection against loss, it can help you and your investment professional formulate a plan to reach your goals. According to one landmark study, the largest factor influencing the risk level of a portfolio’s total return (92%) was the asset allocation decision.

Asset allocation vs. Diversification

Diversification

A risk management technique that mixes a wide variety of investment options within a portfolio. It is designed to help reduce the impact of any one security on overall portfolio performance. For your retirement investments, each of the five approved providers of the UT Retirement Programs offer a wide variety of investment options to ensure that you can achieve a healthy level of diversification.

Asset allocation

The process of dividing investments in a portfolio amongst major asset categories, including bonds, stocks, and cash. The purpose of asset allocation is to help reduce risk by diversifying the portfolio.  Each of the five approved providers of the UT Retirement Programs offers mutual funds and annuity products in all of the major asset categories to ensure a solid allocation of your investments.

Additional information

While either of these investment strategies can be helpful, neither of them can guarantee better performance or fully protect against loss in declining markets.  It’s important to remember, a fluctuating market doesn’t mean you have to press the panic button. As always, investors should continue monitoring the market, and be aware of risk management strategies as they consider whether to stay the course as they work toward their retirement objectives.

Article courtesy of Voya Financial.