Posts made in May 2021

Time. Patience. Discipline. Diligence.  

These are the four key components investors need to do a proper job of managing their portfolio. If you are someone who believes you can build a retirement nest egg by dabbing in the markets, it is unlikely you will ever have enough to stop working. 

One of the most overlooked aspects of investing is aggressive monitoring of your investments. Now, we are not talking about “day trader” stuff where you spend all day hitting the refresh button on your browser for updates. But it is imperative that you monitor not just what is going on in your own portfolio, but what is happening in other investments options that may fit within your strategy.  

Investing is not set-it-and-forget-it and your portfolio won’t stand a chance if you treat it that way.  

Sure, you can make money in a bull market, but how well protected is your portfolio from the next downturn. After all, it’s a matter of when, not if, it will come. That protection requires skill, discipline and constant attention. Your financial strength is critical to your ability to live at a high standard of living now and in retirement. Complacency is a dangerous place to live.  

If you are not paying attention, you just might miss an opportunity to avoid losses or realize gains. As quickly as things change today – 2020 pandemic anyone – you have to be ready to move.  

Find a Pro 

Optimizing your portfolio requires a level of attention that most individuals do not have time for. Between work and family who has time to go through all the prospectuses, read the economic outlooks, listen to investor calls. You know, all the things that financial planners to as part of their jobs. 

You have financial goals for the future. Maybe it’s college for your kids or paying for a wedding or a down payment on a house. Whatever they are, professional financial planners are trained to help investors identify their long-term goals and work with them to achieve those goals.  

No one can predict returns or market movements, but financial planners have the knowledge and experience to develop investment strategies that mitigate risks and put you in the best possible position to optimize your portfolio so you can pay for your daughter’s dream wedding.  

You put your car in the hands of a mechanic and your physical health in the hands of a doctor for a reason. They are highly trained professionals who are dedicated to helping you, or your car, be healthy and active for as long as possible. Why wouldn’t you do the same with your money, unless you think you have the time, patience, discipline and diligence to do it.  

Putting your long-term investing in the hands of a professional financial planner, will put your portfolio on a solid foundation for growth, grounded in the seven principles of long-term investing.  

The first rule of investing is you will make mistakes. Why, because you are human and humans are not perfect. Remember a few posts ago when we told you not to chase the crowd. Trust us when we say, you will find yourself doing exactly that at some point. Mistakes will happen, but the wise investor learns from their mistakes and vows never to make the same mistake again.  

How could I do that 

Investing mistakes can be costly because they lead to lost value in your portfolio. When you do lose value because of something you did, the important thing is to keep you step back from the mess and take a deep breath. Most mistakes are from decisions born of emotion and the worst thing you can do is compound the problem with an emotional response.  

After you’ve had an opportunity to regain your composure, take the time you need to look objectively at the problem. Your goal is to determine where you went wrong, recognize the steps you took and think about what you can to do make sure you never make the mistake in the future. 

Do not, under any circumstances, vow to regain your losses by taking even bigger risks. We talked before about money and emotion not mixing and this is one circumstance where you can easily start a roaring bonfire if you are not careful. 

Remain calm and focused, using logic and reason to work through the issue.  

Overcome Your Mistake 

One way to avoid future mistakes is to understand the two emotions that are always present in investing: fear and greed.  

When the market takes a downward swing, taking your portfolio with it, fear can cause you to panic and start selling. Greed, on the other hand, can cause you to take on unnecessary risks by going for the big score. Whether it’s chasing the shiny new investment object or investing too much in a particular stock, you may not notice what’s driving your decision, but greed is at the core.  

Financial planners remove the emotion from decision-making by understanding your long-term investment goals and working with you to achieve them. They help you work through investment decisions, asking the right, and sometimes hard, questions to keep you on track and rational.  

If you are a go-it-alone investor, find someone you trust, who’s not afraid to push back when they think you are about to make a mistake.  

Like everything else, investing has gone high-tech giving everyone easy access to hundreds of channels through which they can invest their money. But with that convenience also comes danger. A simple Web search will return thousands of stories of investments gone wrong because someone forgot about the long-term and made their decision to sell or buy based on short-term circumstances.  

The pitfalls are real and hard to climb out of. The best strategy is to avoid them in the first place through wise counsel.