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Choosing the Right Path to Your Financial Future - January 19, 2016

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1) THE RIGHT PATH mapping your financial where you W hen where you’re going andfuture, the path you choose depends onclimbing a are, your overall personality. Investing, like mountain, is a journey each of us approaches differently, with investors tending to fall into one of three categories – Speculators, Traders and Long-Term Investors. For the vast majority, the long-term investors’ approach has historically proven most successful. Unfortunately, most popular media have a short‐term focus and deliver opinions for traders or speculators. This can create confusion for long‐term investors and spur action at the wrong time. For long‐term investors, understanding each approach along with its pros and cons may lend clarity to periodic market volatility and hopefully influence portfolio moves in a positive way. N N N aka The Thrill-Seeker Speculators tend to seek high returns in acceptance of higher risk. They are less diversified, with concentrated bets in individual securities, and may even take positions with borrowed funds. Normal market fluctuations can inflict dire results on speculators’ portfolios, and small fluctuations, those fully acceptable to long‐term investors, can create major problems. Just as cascading snow may turn into an avalanche, normal (even small) market fluctuations can be grave since this group employs leverage to move in and out of positions. N N aka The Risk-Taker N Traders seek to take advantage of short‐term market gyrations to generate short‐term profits. Their holding period is likely much shorter than long‐term investors’ as they enter and leave the market rapidly, seeking to trade with the “trend” up or down. The short‐term focus of these traders can accelerate the downside over the short term. A tendency to act to preserve capital in weak markets and a short-term focus cause even normal market fluctuations to have a negative impact on traders’ portfolios. N N THE N N aka The Scout N Long-term investors are in it for the long haul. The odds of success for this group are high over a long period, as has been the case throughout history. These investors have diversified portfolios that help manage risk and avoid the need to jump in and out of the market at every negative headline. They understand that over a long period the markets will experience ups and downs, including recessions and bear markets. They would like to avoid the down moves, but since their portfolios are diversified they have the ability to ride them out and make changes as needed, capitalizing on opportunities along the way. The belief that each up market will reach a level higher than the previous up market will be the catalyst for a generally growing portfolio over time. A LITTLE BIT OF EACH VOLATILITY PRESENTS OPPORTUNITY Investors sometimes participate in all three categories. They will have a core long‐ term portfolio with small amounts allocated to more aggressive strategies. There is nothing wrong with this as long as you are aware of the risks and pay close attention to the amount allocated to such strategies. You should only commit capital you are willing to risk to avoid disrupting your path to your long-term goals. For long‐term stock investors, periods of volatility present a good time to perform a portfolio check‐up with their financial advisor. When markets decline, consider making strategic adjustments and take this time as an opportunity to plan for tax implications – if realized gains have been taken this year, look at positions with losses to determine if they should be realized. Although each type of investor exhibits distinctive characteristics, they have at least one thing in common: They can benefit from a guide as they forge their path to financial independence. Working with your financial advisor to develop a clearly defined plan for your journey can lessen the weight on any investor’s shoulders. ©2016 Raymond James & Associates, Inc., member New York Stock Exchange/SIPC. ©2016 Raymond James Financial Services, Inc., member FINRA/SIPC. Investment products are: not deposits, not FDIC/NCUA insured, not insured by any government agency, not bank guaranteed, subject to risk and may lose value. Past performance does not guarantee future results. Diversification and asset allocation do not ensure a profit or protect against a loss. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected. 15-WWW-0401 CW 1/16