CORRELATED, NON-CORRELATED and QUALIFIED INVESTMENTS
DO YOUR CURRENT INVESTMENTS ALIGN WITH YOUR GOALS AND RISK TOLERANCE???
WHAT ARE CORRELATED INVESTMENTS? Asset correlation is how investments move in relation to one another and when. When assets move in the same direction at the same time they are considered to be highly correlated. A correlation of 50% between two stocks, for example, means that in the past when the return of one stock was going up, then about 50% of the time the return on the other stock was going up too.
WHAT ARE NON-CORRELATED INVESTMENTS? When one asset moves up and the other goes down, the two assets are considered to be negatively correlated, meaning non-correlated. If two assets are considered to be non-correlated, the price movement of one asset has no effect on the price movement of the other asset.
WHAT ARE QUALIFIED INVESTMENTS? Pre-tax retirement savings accounts, I.E. 401K, IRA 403B, Simple IRA, SEP IRA, etc. Qualified accounts are subject to withdraw rules in which you will be forced to take distributions and pay income tax at that point.
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