Asset Allocation: Allocating your fund assets among
different economic sectors and geographic regions appear
to be the best answer to the old saying "do not put
all your eggs in one basket". By "balancing"
your investments you spread your risk, as returns in one
area may be better than another one. Occasional re-balancing
may be necessary if personal or economic circumstances change.
Buy and hold: A strategy that was given credibility
by Warren Buffet a very successful and well known investor
who is its strongest advocate. In a nutshell, you simply
buy one or several mutual funds that suit your situation
and hang on to them for several years at a minimum. The
strategy is in line with the generally accepted principle
that investing in funds should only be done for the long
term. Its appropriateness to your situation depends on your
views on investing and the particulars of your personal
situation.
Dollar-cost averaging: The strategy is to invest
a certain amount into a mutual fund on a regular basis whether
this is monthly, quarterly, semi-annually or annually. When
the unit values of the fund are down you end up with more
units. When the value is up you get fewer units. In the
process you average the value of the units you are buying.
In the mean time you are saving on a regular basis, which
aids in the development of good savings habits. To further
encourage the habit you may wish to consider a "pre-authorized"
method of payments through which withdrawals from your bank
account are made automatically.
