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What's Your Investment Style?


The word "style" describes how people dress, wear their hair, and even walk and talk. But style also plays a role in how you invest money. Identifying and adopting an investment style that's a good fit is the first step toward securing your financial future.

 

Choosing an investment style allows you to take a planned approach to investing. By selecting a style that's in sync with your financial situation and then choosing investments according to that style, you boost your chances of getting what you want out of your investment program.

 

Here are some basic distinctions:

 

Growth: Investors using a growth style put their money into securities, typically stocks, that are growing in earnings. These stocks are growing, or are expected to grow, faster than the stock market average. The growth investor aims for big gains over the long term, but also faces risks as growth-oriented companies go through their ups and downs. In fact, short-term losses can be substantial and severe during down cycles.

 

Value: In the value style, investors look for stocks that are comparatively low-priced, but the price doesn't accurately reflect the company's potential and current assets. Thus, value investors are betting that the company's stock will rise again to reflect its true value.

 

Income: Investors using an income style choose securities that produce regular but modest earnings. Some examples include government-issued bonds or money market mutual funds. Income investments don't bring as much potential for gain as growth investments, but they also carry less risk for loss. Thus, income investors aim for fairly stable earnings over time.

Blended: The blended style combines both growth and income investments, to strike a balance between the potential for gain and the risk of loss.

 

Your investment style depends on your goals, resources, and your risk tolerance. Other factors to consider are your age, financial goals, and investment time frame. If you still have a few decades before retirement, you'll have ample opportunity to regain whatever short-term losses you might incur. Thus, a growth investment style may serve you well. But if retirement is a few years away, or you'll be sending a daughter to college in five years, you can't afford to take a severe hit. You'd be better off with the less risky income investment style.

 

Whatever your style, Denali Alaskan has savings vehicles that help you get closer to your goals--safely. Use your credit union options to accumulate the funds necessary to make other investments, with style.

Copyright 2008 Credit Union National Association Inc. Information subject to change without notice. For use with members of a single credit union. All other rights reserved.