Second Quarter 2024
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1. Choose Investment Style: Investment styles further affect how you diversify your portfolios, so be sure to find one that works for you. Some of the most common options include small-cap versus large-cap, sector vs. industry, growth vs. value and domestic vs. foreign. 2. Determine Asset Allocation: Deciding how much of your capital to invest in each category depends on a number of factors, such as your personal ability to tolerate risk and how soon you may need to liquidate investments. As an example, younger people may want more risk exposure, while people closer to retirement may want to err on the side of caution. Overall, your general appetite for risk determines how best to diversify your investments. Contact LPL Financial for more information on how to strike the right portfolio balance. Kathy or Niko may be reached at 760.439.6960, Looking to Save on Your Insurance? Do your insurance premiums keep going up every year? Frontwave Insurance Services can help! A one-stop shop for all of your insurance needs, Frontwave Insurance Services can find the best insurance for you at the best price. Get a free, no-obligation insurance quote by visiting frontwavecu.com/ insurance or calling 844.788.0820. • Auto Insurance • Motorcycle Insurance kathy.chesney@lpl.com or niko.z.pandeleos@lpl.com.
Managing Risk With Diversification
Provided by Kathy Chesney, ChFC, CLU and Niko Pandeleos, Associate Financial Advisor When you first considered investing, it probably seemed like a good idea to focus heavily on what worked best for you from the beginning. If stocks from a particular company brought you high yields, why not double up on your original investment? The answer is diversification. It may seem counterintuitive, but diversification is a fundamental aspect of risk management, and plays a critical role in building an investment portfolio. Effective diversification requires
This covers three main asset classes: stocks, bonds and cash. Some financial advisors consider this separate from diversification. Even so, the fundamental principle is the same and can be used in tandem with company-specific or industry-specific diversification. While asset allocation may help to manage market risk, it does not provide a guarantee against market losses. It seeks to provide a cushion against market volatility. Diversify Within Asset Categories When it comes to diversifying within asset categories, financial advisors focus on spreading out stock among different types of companies. There are also different types of bonds to consider. Yes, the portfolio may, at times, yield lower returns than those from investors who decide to specialize. Putting These Concepts to Work So, what steps can you follow to manage risk? Here are a few tips to consider:
more than just purchasing a random bundle of investments. Otherwise, your investment may all move in the same direction in both up and down markets. Instead, investors might want to consider selecting securities that do not all move in correlation to each other. The U.S. Securities and Exchange Commission advises investors to diversify by asset category and within the asset category. Diversify by Asset Categories Asset allocation is the practice of dividing up your investment capital among different asset categories.
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This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. This material was prepared by LPL Financial, LLC. Securities and advisory services are offered through LPL Financial (LPL) , a registered investment advisor and broker/dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. Frontwave Credit Union and Frontwave Investment Services are not registered as a broker/dealer or investment advisor. Registered representatives of LPL offer products and services using Frontwave Investment Services, and may also be employees of Frontwave Credit Union. These products and services are being offered through LPL or its affiliates, which are separate entities from and not affiliates of Frontwave Credit Union or Frontwave Investment Services. Securities and insurance offered through LPL or its affiliates are:
Insurance products are offered through Frontwave Insurance Services, LLC, a subsidiary of Frontwave Credit Union. Insurance offered is not a deposit and is not federally insured or issued by or guaranteed by Frontwave. Insurance may be required as a condition of credit for some Frontwave loans and may be purchased from an agent or insurance company of the member’s choice.
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Your credit Union (“Financial Institution”) provides referrals to financial professionals of LPL Financial LLC (“LPL”) pursuant to an agreement that allows LPL to pay the Financial Institution for these referrals. This creates an incentive for the Financial Institution to make these referrals, resulting in a conflict of interest. The Financial Institution is not a current client of LPL for advisory services.
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