V.  Select quality real estate and bond investments

Asset allocation is a second common way to reduce risk. The most common asset allocation is to bonds. An increasingly popular asset allocation is to Real Estate Investment Trusts (REITs). AVI prefers REITs, since both the stock prices and the dividends of well-managed REITs are expected to grow, unlike the principal and interest of bonds which are fixed. Also, like bonds, REIT prices tend not to be correlated with stock prices. Therefore, they are appropriate for diversification.

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