2013 May Be The Year Individuals Come Back To Equity Markets; They Need Education About Risks In Both Equities And Erosion Of Bond Principal Value

Monday, January 21, 2013 08:46
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2013 May Be The Year Individuals Come Back To Equity Markets; They Need Education About Risks In Both Equities And Erosion Of Bond Principal Value

Tags: Advisor businesses | investor behavior | stocks

The economy is improving, the worst of the fiscal cliff has been avoided, and returns on fixed-income investments is historically low.
 
That’s why growth-hungry individual investors are expected to warm back up to the equities markets, especially as the economy continues to improve and inflationary fears increase.

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Since April of 2009, investors have pulled over a quarter trillion dollars of equity funds, just as equities began one of their best performance periods.
 
The Dow Jones Industrial Average climbed about 60% over that same period.
 
The first full week of January saw investors shifting over $15 billion back into equity mutual funds. Bond funds and money market funds rarely see those types of inflows.
 
The economy has been steadily improving with increases in employment and a rise in the housing markets.
 
Many investors may still not be aware that increasing interest rates will cause principal values of bonds to erode. And stocks are not risk free.
 
Any time money is in motion, it’s an opportunity not only for investment but also for investor education. That education is about the best marketing tool you’ll ever have.

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