Maintaining Focus in an Uncertain Environment
The Importance of an Equity Allocation
There have been a number of challenges to investors in recent years, and many investors may think that moving out of equities and into more conservative fixed income options makes the most sense. However, in the face of uncertainty the best course of action is to remain focused on your long-term goals.
Address Volatility Through a Balanced Approach
One of the strongest arguments for maintaining positions in both stock and bonds is the historically higher returns achieved through a blended portfolio approach. As shown below, only a modest 20% allocation to stocks would have achieved higher annual returns compared to an all-bond portfolio — with less risk (as measured by standard deviation). With increased equity allocations came incrementally higher returns and volatility.
A Blended Portfolio Can be a Smart Strategy for Any Market
Align Your Portfolio with Your Financial Goals
It's important to remember the effect of inflation on reducing the actual returns on your investments. Even a low inflation environment such as we’re in now can impact your performance over time; rising inflation rates can squeeze returns even more. Stocks have historically been one of the few asset classes to provide the return potential to manage these inflation risks while also providing the growth potential needed for long-term financial goals.
Unfortunately, there is no crystal ball to tell us how the markets will perform, or what asset mix will perform best in any given environment. The most prudent course of action is to maintain a portfolio that is deployed across both stocks and bonds so you may be better positioned to weather market uncertainty. Call us today at 1-800-DREYFUS to speak with a Dreyfus representative who can help align your portfolio with your financial goals.
Investors should consider the investment objectives, risks, charges, and expenses of the fund carefully before investing. Download a prospectus, or summary prospectus, if available, that contains this and other information about the fund, and read it carefully before investing.
Equity funds are subject generally to market, market sector, market liquidity, issuer and investment style risks, among other factors, to varying degrees, all of which are more fully described in the fund’s prospectus.
Diversification does not ensure a profit or protect against loss.