| Passive strategies require little change in the | | | | used more often with equities than bonds. |
| portfolio, with a few occasional adjustments to | | | | 3. Dollar cost averaging |
| offset market change or investment objective | | | | Investments are purchased at regular time |
| changes. This method assumes that the | | | | intervals regardless the fluctuation of prices. If the |
| investments are made in an efficient market. An | | | | price trend is downward, the average price will be |
| efficient market is a market where the price | | | | greater than the current price. If the trend is up, |
| reflects all the available information and the | | | | then the average cost will be less than the |
| investor will experience few surprises. | | | | current price. This method is also an alternative |
| 1. Balance mutual funds | | | | for market timing. |
| Mutual funds are usually a mix of investments, | | | | 4. Buy and Hold |
| with different risks and maturity dates. Balanced | | | | The buy & hold strategy aims to provide the |
| fund managers offer diversification for the small | | | | highest rate of return for a given level of risk. |
| investor, and the fund primarily invests in a mix of | | | | When using this strategy,stocks and bonds are |
| equities, different maturity date bonds, and stocks | | | | held for a long period of time or until investment |
| and bonds with different risk levels. | | | | matures. |
| 2. Index portfolio | | | | 5. Dividends reinvestment plan |
| An indexed portfolio is designed to duplicate a | | | | The dividends paid by public trading companies are |
| major index, like the NASDAQ 1000 index. The | | | | reinvested in additional shares. The investor pays |
| portfolio includes the same shares in the same | | | | tax on the dividend as though it were taken in |
| proportion and the purpose is to duplicate | | | | cash. The reinvestment plan purchases are made |
| performance, not to out-perform the market. | | | | by a trustee. |
| The returns are quite predictable. This method is | | | | I hope this information will help. |