Identifying appropriate strategies for meeting
mid-term goals can be more perplexing than choosing strategies
for short- or long-term goals. That’s because you need to
find the right balance between protecting your assets and achieving
the growth that will let you afford your goal.
For example, you may not want to sacrifice
the potential for asset growth that’s possible with sometimes
volatile investments, such as stocks, stock
mutual funds,
or high-yield
bonds. But if you have to liquidate your holdings when the markets
are down, you may end up with less than you need to meet your
goal.
Strategies other investors have used:
Set limits for gains and losses on your stock investments. For example, decide ahead of time that you’ll sell if an investment increases 20% in value — or whatever percent you set. You can ask your financial adviser for guidance. Establish a similar downside position, or cut off, to limit your losses in a falling market. As you reinvest, you may want to look for less volatile investments.
Buy
zero coupon bonds
that
mature at the time you’ll need the money, if you can
pinpoint the date. Using these bonds to pay college tuition
may work better than using them to make a down payment on
a home if you don’t know exactly when you’ll buy
or how much you’ll need.
Balance your portfolio with a mix of income and growth investments and watch them closely, so you can sell if there’s a market downturn. You can afford to take some risk, but you may not have a long enough timeframe to wait for a potential rebound.
Gail Dudack,
Managing Director,
Dudack Research Group
Gail Dudack, 
