Investment Education Learn the Basics Allocate & Diversify Investment Objectives
Allocate & Diversify
Back to Allocate & DiversifyInvestors who have time to ride out the inevitable ups and downs of the market tend to concentrate their portfolios in stocks. Historically, stocks have always provided positive returns over periods of 15 years or more and have the greatest long-term growth potential of any traditional investment. However, if you're saving for a major but shorter-term financial goal, like paying college tuition, you might be less inclined to put your entire portfolio at risk. Because bonds pay regular interest, in addition to the return of principal at maturity, they are typically attractive to investors looking for a regular income stream or a lump sum payment at some point in the future. While bonds are not risk-free, high-grade corporate bonds, municipals and U.S. Treasuries are almost always less volatile than stocks.
Cash and cash equivalent investments, like money market funds, certificates of deposit, and Treasury bills, typically carry the lowest amount of risk. These short-term investments usually pay interest, but generally provide smaller returns than the other major asset classes, or investment choices. One advantage is that cash and cash equivalents are highly liquid, so you can convert your investments easily into currency.
On the other hand, cash investments often do not pay interest rates high enough to offset inflation, so though your investment is growing, you may actually be losing purchasing power over time. For this reason, you might allocate a portion of your portfolio to cash in case of emergency expenses or to pay for shorter-term goals, while the majority of your portfolio concentrates in securities with greater growth potential.
| No related Help & How To articles. |
| Research the Market with ScottradeELITE | 1/4/11 |
| Option Basics | 1/4/11 |
| Introduction to Technical Analysis | 1/4/11 |
With more than 500 branch offices nationwide, Scottrade offers live events in neighborhoods all over the country. Visit your local Scottrade office for a cozy small-group Branch Seminar, or get together with Scottrade customers from your area at our popular User Summits.
Browse All Live Events >Stream live, interactive presentations right to your computer! Check back every week for new Live Webinars on a variety of topics including:
- Market analysis
- Basic & advanced orders
- Research tools
Education meets interaction in the Scottrade Community. Join Scottrade customers from all over the country as you exchange information, ideas and trading strategies in a comfortable online learning environment.
Interact with Scottrade customers and product specialists. Share your thoughts and learn from others. Grow as an investor. Join our community today!
Learn More About the Community >Brokerage Products and Services offered by Scottrade, Inc. - Member FINRA and SIPC
Online market and limit stock trades are just $7 for stocks priced $1 and above.
Any specific securities, or types of securities, used as examples are for demonstration purposes only. No information on this Web site should be considered a recommendation or None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security.
Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing. No transaction fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder, or SEC 12b-1 fees.
Investors should consider the investment objectives, charges, expense, and unique risk profile of an Exchange Traded Fund (ETF) carefully before investing. Leveraged and Inverse ETFs may not be suitable for long-term investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. A prospectus contains this and other information about the ETF and should be obtained from the issuer. The prospectus should be read carefully before investing.
Margin trading involves interest charges and risks, including the potential to lose more than deposited, or the need to deposit additional collateral in a falling market. Margin Disclosure Statement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade Options Application and Agreement, Brokerage Account Agreement, and by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy from your local branch office. Supporting documentation for any claims will be supplied upon request.
Market volatility, volume, and system availability may impact account access and trade execution.
Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.