01/14/2019
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Investing advice that EVERYONE needs to understand...
Here's the deal: You need to diversify your investment strategy. That way if one type of fund isn't doing well, your other investments will balance it out. Once you've opened your 401(k), 403(b), or IRA account, I want you to equally split your investments across these 4 types of mutual funds: Growth, Growth & Income, Aggressive Growth, and International.
Many mutual fund companies, 401(k) plans, and third-party rating services often use different labels to categorize funds. That’s why it’s important to have a firm grip on the terminology behind your investment goals. When you understand where your money is going, you will understand how your money is working.
Growth funds (Mid-cap or Equity funds): These funds are made up of stocks from growing companies. They often earn more money than growth and income funds but less than aggressive growth funds.
Growth and Income (Large-cap, Blue Chip, Dividend Income, or Equity Income): These funds bundle stocks from larger, more established companies. The goal is to earn you money without too much risk. These funds are the most predictable and are less prone to wild highs or lows. Typically, though, they won’t earn as much money as other funds.
Aggressive Growth (Small-cap or Emerging Market): These funds have the highest risk but also the highest possible financial reward. They’re the wild child of funds. They’re made up of different stocks in companies that have high growth potential, but they’re also less established and could swing widely in value.
International (Foreign or Overseas funds): These funds are made up of stocks from companies around the world and outside your home country.
don't take the get-rich-quick approach to build wealth. They keep their investing strategy simple, put money away consistently, and leave it alone. Follow that plan, and you too can build extraordinary wealth.
