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This can even out the ups and downs that come with a volatile, 100%-stock portfolio.
For atruly diversified portfolio, you should blend a combination of non-correlated assets.
If your portfolio is entirely built around U.S. stocks, consider adding foreign stocks, as well.
You dont necessarily need to keep this dry powder in your actual IRA account, however.
Evaluate Your Risk
Many investors arent even aware of how much risk theyre taking in their portfolio.
But in the stock market, high reward equates to high risk.
Evaluate how much risk you’re able to really handle, and adjust your portfolio appropriately.
This typically introduces excess risk into your account.
This leaves you overexposed to a market crash.
By rebalancing now, back to your original strategy, youll be better protected.
Note that an asset allocation should never be a one-and-done strategy.
As you age, and as your investment needs change, so, too, should your allocation change.
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