Page 80 The Dispatch/Maryland Coast Dispatch September 6, 2013 WELCOME BIKERS MONEY SENSE General’s Kitchen Since 1965 Exposure To Stocks Necessary OCEAN CITY – In the wake of will be a day when you’ll be very the financial crisis five years ago, sad.” many people understandably shiftAchieving broad diversification ed away from equities. In a “flight to may well require venturing into safety,” they switched to U.S. Trea- areas of the market that are unfamilsury securities and other fixed- iar to you. Industrials and energy, income holdings. Recently, as the for instance, are two sectors largely economy began to show signs of a unknown to most investors. “If you sustained recovery, the stock mar- talk about a big discount retailer, ket rose to fresh highs. But many everyone understands what it is, people remain reluctant to return to what it does and how it makes equities, concerned about taking on money,” she says. “Getting a handle more risk. on companies that make roller bearWaiting on the sidelines can be ings or aircraft engines is more chalrisky, too. In recent months, interest lenging.” rates have risen from their Keeping your portfolio recent lows, and BofA Merwell diversified also means rill Lynch Global Research not abandoning bonds, evnow believes they will conen with their still-low present tinue to rise gradually, alyields. “It pays to have though unevenly. As rising some high-quality fixed inrates hurt bond values, eqcome securities, because uities may well be poised to that will protect you from continue their run. any surprises that might lie There’s more to it than ahead,” says Marty Mauro, that, though. Equities have BRIAN SELZER fixed-income strategist at an essential role to play in most BofA Merrill Lynch Global Research portfolios. “We believe virtually all and co-head of Merrill Lynch Wealth investors need some exposure to Management Investment Strategy. stocks,” says Cheryl Rowan, senior In addition, managing your portU.S. Equity Portfolio strategist at folio risk means revisiting your stratBofA Merrill Lynch Global Research egy frequently – probably at least and co-head of Merrill Lynch Wealth twice a year, and maybe more often. Management Investment Strategy. Doing so can help you make sure “We believe that, historically, there your overall asset allocation, as well is no better asset than equities to as your specific equity and bond build wealth over the long term. The holdings, is still aligned with your inkey is to include them in your portfo- dividual goals. As Rowan observes, lio in a smart, risk-managed way.” “When markets turn volatile, allocaTo Rowan, the principal question tions need to be adjusted. In reviewisn’t whether to buy stocks or even ing your holdings, look at how prices what stocks to own, but rather what in the market may have affected the you want to accomplish, in both the weighting of various assets in your short and long term. That includes portfolio.” factors such as when you’ll need Say, for instance, that you have a money for particular objectives and higher-risk security accounting for 3 your personal risk tolerance. Saving percent of your original portfolio. If it for your middle schooler’s college grows quickly, it could soon make tuition, for example, is different from up as much as 8 percent or 9 peraccumulating assets for retirement cent of your holdings, creating an – even if both are equally important imbalance – and increasing your to you. Because college is coming risk if the security suddenly begins within several years, you may not to lose value. You might consider want to take much risk with those paring back an investment like this, assets, though you still need them selling all or a portion of it when to grow. For that portion, you might prices are relatively high and using consider mature companies with the proceeds to bolster your portfofairly stable earnings that may pro- lio in other ways. vide consistent, if modest, growth. Another reason to review your “They’re not as exciting as some strategy regularly is to confirm that other companies, but that’s not their it’s still lined up with your goals. As job,” Rowan says. “They provide you move closer to specific events, stable revenues and earnings, and you may well want to be more contheir stock prices tend to be less servatively invested. And because variable.” life goals change just as markets And while security is also impor- do, tell your financial advisor about tant for your retirement income, the any significant changes in your situlonger time frame gives you an op- ation or your financial objectives. portunity to push for above-average That way, you can see to it that your returns. You might devote a portion money is always helping you pursue of your stock allocation to more what matters most to you – allowing aggressive, concentrated holdings, you to concentrate on the aspects of keeping the rest of your retirement your financial life that you can conportfolio well balanced and diversi- trol. fied. As Rowan puts it, “When you “One way to do that is to include have your goals clearly stated and stocks of companies that are not you design a portfolio to achieve highly correlated with one another,” those goals, it’s much easier to stay she explains. “You don’t want all of focused.” the stocks or funds in your portfolio – Brian Selzer to be affected by the same economSpecial To The Dispatch ic and market dynamics. When (A Merrill Lynch Wealth Manageeverything is going up together, ment Advisor who can be reached at you’ll be very happy, but then there 410-213-8520.) The Original House Of Chipped Beef Open 6:30 a.m. 7 Days A Week 410-723-0477 74th St. & Coastal Hwy. At The Beachmark Motel House Specialty The Original House Of Creamed Chipped Beef On Toast Or Biscuit With Hash Brown Potatoes Or Grits We Make This From Scratch! OUR OWN RECIPE! 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