Constant Ratio Investing

An investing strategy where investors adjust their portfolios on a regular basis to keep the ratio of stocks and bonds constant. According to ""Wealth Enhancement & Preservation,"" a Web-based database created by Robert A. Esperti and Renno L. Peterson for the National Network of Estate Planners, ""Constant-ratio investing is yet another averaging method of investing. Here you are fixing the overall allocation of stocks and other asset classes. An example might be 50 percent equities and 50 percent bonds. Each month you adjust the portfolio so that this ratio remains constant."

By sticking to the same percentage allocation week-in and week-out, you lessen the chance of being whipsawed by a sudden change in the stock market, bond market, or both.

 

 

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