Misunderstanding one : debt is equivalent to safety
The fact is : the security of bonds varies
Until recently, the U.S. Treasury was seen as a zero -risk products , people think of the issuer ( ie Uncle Sam ) is absolutely impossible to repay the money . After the downgrade of U.S. Treasury bonds , investors may be able to recognize rising to a higher level, to see no matter what bonds are hidden risks. Investment advisers say , the status of the bonds in the portfolio still can not be denied , holding bonds usually to generate revenue and to ensure stable ─ ─ investments when stocks fell , bonds usually rise, at least not like the stock decline so much . However, differences in the level of risk bonds is large, the probability of occurrence of large losses of some bond debt is much larger than the other . Please note: The higher bond yields , the greater the risk . For example, high-yield corporate bonds ( generally referred to as “junk bonds ” ) yields an average of 6.6 percentage points higher than U.S. Treasuries , the risk of default they should be higher.
Positive Solutions: Do not pursue high- income
Even if the investment in high -yield bonds , money or larger than the probability of losing money some, but such bonds fluctuated more similar ups and downs and ups and downs of the magnitude of the stock price , and as smooth unlike bonds. To reduce the risk , the proportion of investors in the bond portfolio of high -yield bonds should not exceed 7% of the portfolio should be diversified , which requires both high-yield bonds , but also the configuration of municipal bonds, investment grade corporate bonds and foreign bonds . In addition, ( bond value will shrink ) , Florence recommended investment horizon is shorter stick bonds ( 7 years or less ) , as against the interest of investors can not control the rising risk of such bonds when interest rates rise minor damage .
Myth two: think you have enough to diversify the investment portfolio
The fact is : hold a dozen fund ( or both hold stocks and bonds ) is not necessarily equal to investment diversification
2010 data show that households invest in mutual funds held by the average household of seven funds . This can be enough , diverse enough , right ? But that is not the case, a closer look will find that even holds a large number of funds, portfolio concentration may still be much higher than you initially thought . Investors often do not realize they may hold two or more very similar investment strategy fund , a fund ‘s name or investment history does not always reflect its investment strategy. For example, the S & P data show that $ 61 billion AUM Fidelity contrarian fund (Fidelity Contrafund) with assets under management of $ 24 billion T. Rowe Price Growth Stock Fund (T. Rowe Price Growth Stock) of The main investment objective is iT stocks and consumer discretionary stocks , while investors holding these two funds is actually double down on these two categories of shares .
Meanwhile, headquartered in a number of varieties to invest in assets such as stocks and bonds, the general mainstream managing director of Bethesda, Maryland (Bethesda) wealth management company Absolute Investment Management Robert mouth维德默(Robert Wiedemer) said there product trend boost portfolio performance unsatisfactory , but too many investors are confused them to ignore it. He said he will be configured by the customer ETFs portfolio of about 20 % of its assets to gold and silver , when stocks fell, gold and silver are often able to remain strong . Investment Advisor certification bodies nonprofit Certified Financial Planner Board of Standards Consumer Rights Commissioner Eleanor mouth Blaney (Eleanor Blayney) said that in the occasion of the weak U.S. economic growth , expanding overseas stock exposure may be a wise choice.
Positive Solutions: Lift the veil and see the true face of the Fund
Bruce Rosen said investors should look at what their own mutual fund investments held in the end , pay attention to whether there were repeated industry or company name. He said that a fund should be listed on the website of the fund ‘s top 10 holdings and investment industry distribution .