Stocks and bonds and cusip registration for mutual funds

There’s no single asset class that’s best for every investor. You should base your investments on four criteria: * Your age. Younger people have more time to recover if one of their investments doesn’t perform as expected. They can afford to be more aggressive in their stock and mutual fund choices. * Length of time until you need the money. If you are saving for college and your child graduates high school in three years, you need safer investments—think bond funds, CDs, and cash—than someone saving for college in 20 years. * Income generation. If you’re building a retirement portfolio, you want assets that generate income and

preserve your nest egg. Bonds and dividend stocks are good options. * Risk tolerance/willingness to tolerate decline. This goes to the heart of who you are as an investor. If you’re the sort of person who panics over a 10% swing in the market, even knowing recovery is likely in a well-diversified portfolio, you won’t be comfortable with an investment plan heavily weighted toward stocks. When it comes to risk in your portfolio, here’s my rule of thumb: Take your maximum tolerable 12-month decline and double it. That’s the percent of your portfolio you may consider investing in stocks and equity funds. The rest should be

in safe assets such as bonds, bond funds, and money market funds. Example: Bill and Catherine are approaching retirement. They both agree that they would be very uncomfortable if their nest egg lost 25% in a year. Bill and Catherine may want to limit their stock exposure to no more than 50% of their retirement portfolio. considerations on growing wealth.