Market Fluctuations

Subscribe to conventional wisdom, and you might believe that investments in the stock market are best left the wealthy. Stock market myths have convinced many potential investors to steer clear of equities, and that can be a shame . . . especially when you consider that, through the years, the stock market has proven itself to be an outstanding investment alternative, outperforming most other traditional instruments. Over time, stocks have been the most reliable investment for individuals seeking to build wealth.

Historically, market fluctuations have demonstrated that any equity investment carries with it a degree of risk. For that reason, the average investor often can't afford to put large amounts of money in a single stock. Today, investors have tools to help them navigate the stock market.

Stock or "equity" mutual funds distribute investors' money throughout a pool of dozens of different stocks, allowing investors to diversify and thereby "spread the risk" of their investment.

An equity mutual fund gives the average investor access to professional money managers, experts who are paid to direct investment dollars. Fund managers decide when to buy, when to sell, and when to hold the stocks that make up the mutual fund. Their decisions are based on extensive research and other information, such as the health of individual companies and general market and economic trends. For mutual fund investors, access to a market professional means less time making complicated financial decisions and more time enjoying the fruits of a good investment.

A benefit of equity mutual funds is that they encourage investors to stick with their investments, even during periods of volatility. For instance, according to Ibbotson Associates, a $1,000 investment in common stocks between 1925 and 1996, compounded annually, would have been worth more than $1,349,170. A similar investment in Treasury bonds would have been worth just $35,330. This example is for illustration purposes only to show the effects of compounding a fixed investment over a long period of time and is not to be viewed as representation of any particular investment.

Historical data shows that the best way to overcome market fluctuations is by keeping a longer-term perspective on investments. It's true that past performance does not necessarily reflect future performance, but any 15-year investment made between 1925 and 1995 would have increased in value. Equity investors are usually rewarded for their patience.

Investors should note that not every investment is right for every investment strategy. To find the assets or mix of assets that's right for you, call us at ENB Associates 549-1114. Thanks to equity mutual funds, more and more investors are discovering that it's time to take stock in their future.

ENB Associates Inc. is a wholly owned subsidiary of Evans National Bank. Securities are offered by O'Keefe Shaw & Co., Inc. Member NASD, and SIPC. Products purchased through O'Keefe Shaw may lose value, are not deposits with obligations of, or guaranteed by Evans National Bank or affiliates and are not insured by the FDIC.