Although your investments may potentially lose value, this risk can be reduced if you’re investing for the long term. Historically, every market downturn has resulted in an upturn. It’s important to note that market downturns can occur at any time and past performance doesn’t guarantee future results.
As fiduciaries, we always keep your interests in mind and recommend asset allocations that are sufficiently diversified and have moderate risk profiles. Also, the allocations are regularly rebalanced to gradually become more conservative as the expected date of college enrollment nears. With regular monthly investments, we ensure that you invest in different points of the market, so your investment returns are smoothed out. This is called dollar cost averaging. For example, let’s say you purchase 3 shares of stock over time. In January you buy 1 share at $20, in May you buy 1 share at $40, and in October you buy 1 share at $60. In December, the stock price drops down to $50. You are still up $30 on your investment as you collectively paid $120 for 3 shares, and now those 3 shares are worth $150. However, returns are subject to risks and uncertainties and there is no guarantee that an account will achieve a particular result or that an investor will be able to avoid losses.
Please see important disclosures.