One of the most common questions we hear is, “Which investment should I choose?”
Our answer is this: Consider a diversified investment like Conservative, Moderate, or Aggressive Mix.
Think about these three investments like they’re classic cocktails.
Take for example, a martini. Sure it’s a little on the dry side, but you can come back to it time and time again because you just can’t beat a classic.
What kind of cocktail do you like? We’re mixing and serving them up to you fresh. We’ve got three different recipes: Conservative, Moderate, and Aggressive Mix. Learn more about the mixes, and choose one that reflects your investing goals.
Start by reading the ingredients.
The mixes are like classics, designed to provide broad exposure to different asset classes and geographies according to your risk appetite. Each of the mixes are ‘allocation funds’. These provide exposure to a broad mix of global stocks, bonds, and cash, which make up the three classic ingredients.
This investment includes a mix of stocks from the US, Europe, and Asia. There’s a blend of small and large companies across many different industries, including the stocks of each of the 500 largest public companies in the US.*.
The investments also include three different bond funds: IUSB, CRED and GOVT*. Bonds, especially those issued by investment grade institutions such as governments and large corporations, are traditionally regarded as stable investments.
What’s the difference between these three mixes?
All three of the funds have the same top 10 holdings. The difference is asset allocation. That’s a fancy way of saying a certain ratio or weighting of investments or ingredients. When you’re building your classic investing cocktail, choose the ratio that suits your taste and appetite for risk.
Taste? Ratio? Why does that matter?
Investing is about balancing the sweet taste of reward with the bitter reality of risk. As the risk profile increases, you generally have the potential for higher returns and a greater risk of loss. By sticking with a lower risk investment you are targeting slower, steadier growth. Stocks have historically been more volatile than investment-grade bonds, and are generally considered to be higher risk investments.
Take a look at asset allocation in action:
Conservative Mix has the highest percentage of bonds out of all three.
Bonds are generally lower risk, lower reward. That makes this conservative.
Moderate Mix has a more balanced ratio of stocks to bonds.
Increasing the risk a little bit, to increase the potential reward.
Aggressive Mix is more heavily weighted toward stocks.
Higher risk, higher potential for reward.
It’s time to order off the menu. Tell me the surgeon’s general warning!
We believe that you should choose just one Mix level that reflects your risk profile and investment goals, rather than invest in all three. This is an investment you can start on Auto-Stash to automatically invest according to your desired schedule and, in the process, take advantage of Dollar-Cost Averaging. Don’t stress about whether the prices go up or down a little from one day to the next. Just keep investing, and hold them for the long term.
*The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market value weighted index with each stock’s weight in the index proportionate to its market value.
Note: These are just a few of the investment choices available on Stash and may not be suitable for everyone. Depending on your risk profile, you may not see the investments on Stash. See our Disclosures.
ETFs may not be appropriate for all investors. To determine if these ETFs are an appropriate investment for you, carefully consider the ETF’s investment objectives, risk factors and charges and expenses before investing. This and other information can be found in the ETF’s prospectus. ETFs are subject to risks similar to those of other diversified portfolios. Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors.