Asset allocation is the process of dividing your money among different investment types to find the combination that balances your expectations for returns with your concerns about risk. It is a key factor in determining long-term performance results. Asset allocation helps you diversify your holdings, balance risk and reward, and plan for the long term.
Diversification is a way to reduce investment risk by dividing your contributions among a variety of investments. A diversified portfolio typically has a mix of stocks, bonds, and cash. You can also diversify within each of these types of investments.
Dollar cost averaging means investing the same amount on a regular basis. This enables you to buy more "units" when the price is low and fewer "units" when the price is high. The program is most effective when you are able to continue investing equal dollar amounts at regular intervals through periods of both low and high price levels. While this will not assure a profit or protect against loss, it is a proven technique that may lower the average cost per share over time.
Portfolio rebalancing provides periodic adjustments to help maintain your chosen asset allocation strategy. With automatic portfolio rebalancing, you determine how often you want your portfolio rebalanced (quarterly, semiannually, or annually) and then our daily valued system will redistribute the assets to reflect the percentage in your model portfolio.
Large blend funds focus on big companies that are fairly representative of the overall stock market in both size and price. These funds often track closely with the S&P 500 index. A blend fund may contain growth stock and value stocks, or it may contain stocks that exhibit both characteristics.
Large value funds focus on companies with market values greater than $10 billion but with stocks less expensive than the market as a whole. They often come from utilities, energy, or financial sectors. A value fund focuses on companies that are undervalued in price and are expected to eventually see their worth recognized by the market.
Small growth funds focus on companies with market values less than $1.5 billion. Most mid-growth funds focus directly on companies with market values between $1.5 and $10 billion. Others invest in stocks of all sizes, thus averaging a midsize profile. Both target firms projected to grow faster than the overall market.
Small value funds invest in less popular companies with values less than $1.5 billion. Mid-value funds focus on medium-size companies or buy stocks of all sizes, creating a midsize profile. All look for stocks that are cheap relative to potential.
This information is provided by Ameritas®, which is a marketing name for subsidiaries of Ameritas Mutual Holding Company, including, but not limited to: Ameritas Life Insurance Corp., 5900 O Street, Lincoln, Nebraska 68510; Ameritas Life Insurance Corp. of New York, (licensed in New York) 1350 Broadway, Suite 2201, New York, New York 10018; and Ameritas Investment Corp., member FINRA/SIPC. Each company is solely responsible for its own financial condition and contractual obligations.
Ameritas® does not provide tax or legal advice. Please consult your tax advisor or attorney regarding your situation.