I remember about twenty years ago talking to a dentist friend about dental hygiene and recall him saying that if he could do just one thing it would be to floss every day. Even if you were to never brush your teeth. I never forgot that. Obviously, it’s most commonly not one or the other, but it reminded me of a discussion I recently had. The question was, “there are lots of things related to financial planning and investing. But are there just a few things one could do that we would consider most important?” What a great question. So, after some further thought, I do believe there are a few things that come up over and over which could prove to be helpful over time. Here goes.
Time in the Market
We live in a world of constant information, and that includes the financial arena. Not only that, but investing is complex and can be challenging, especially when we rely on it for our future wellbeing. It seems like we are often times wondering what we should be doing “now” to achieve maximum success. However, we would say that for the best future opportunity for success, time “in the market” is better than “timing” the market. When we seek to invest by purchasing various investments, whether they be a stock, bond or something else, these tools are meant for long-term thought patterns. Not to say that different cycles and markets cause us to change direction sometimes, but the mindset still needs to be longer-term.
Take Your Emotions Out of It
There’s an old saying that goes; “the financial world is the only place when we are having a sale, that no one wants to buy any.” The point of this little quip is that investing is emotional and can often seem even counterintuitive. We all know to buy low and sell high, but when things get rocky, it seems our first intuition is to get out and see what happens. We agree that it can be extremely difficult at times. However, what we have found time and time again is that making emotional decisions can work against you.
So, here’s another saying we probably all know. “Don’t put all of your eggs in one basket.” We consider this to be very true regarding investing. You may have a portfolio that has many different things in it at any time. By definition, there is always going to be something that is doing better than others at any given time. However, this will change and then something else will take the lead. Diversification is not only for investment growth but risk management, and we believe it to be the best option for investing over time.
There you have it. While true wealth management does indeed encompass many things, we believe that none of them would be as successful if the three things listed here were not involved. It’s what we have been doing for more than thirty years and will believe in them thirty years from now.
Investing involves risk. No investment strategy can guarantee positive results. Loss, including loss of principal, may occur. Material discussed is meant to provide general information and it is not to be construed as specific investment, tax or legal advice. Keep in mind that current and historical facts may not be indicative of future results. Diversification is an investment strategy that can help manage risk within a portfolio, but it does not guarantee profits or protect against loss in declining markets.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. (C) Twenty Over Ten