Investing during uncertain times
Before you decide to do anything with your investments during uncertain times, consider the following:
Investing is a long term endeavor. Invest your assets with an eye to the future.
Perhaps you are looking to save for your children’s education, or you may want to build a nest egg for your retirement. You want to focus on long term expectations for the investment markets rather than near term fluctuations.
Your investment strategies ought to consider where the economy may be in six months, a year or five years. Do you know which sectors are likely to out-perform, and which are likely to languish over that period? Even if you are an avid follower of the driving forces behind the stock market swings, the likelihood of your being able to “ride the crests” of the market with constant, short term purchases and sales (day trading) is small.
We will help you keep these issues in mind and shift the focus from today, tomorrow, or next week to long term planning goals.
Don’t put all your eggs in one basket.
In other words, don’t overlook the importance of diversification. Risk aversion and planning horizon are important considerations when determining your portfolio’s allocations to equities, fixed income investments, foreign markets, and the myriad of other alternatives available.
Oftentimes losses in one market will be offset by gains in another. A closer analysis of the markets reveals down-turns in one sector of the economy coinciding with up-turns somewhere else.
Diversification may help reduce, but cannot eliminate, risk of investment losses. Historical performance relative to risk and return points to, but does not guarantee, the same relationship for future performance. There is no assurance that by assuming more risk, you are guaranteed to achieve better results.
Make investing a habit.
You may be familiar with the term “dollar cost averaging.” It is an investment strategy designed to reduce volatility by purchasing fixed dollar amounts of a security at regular intervals, regardless of what direction the market is moving. Simply put, you can purchase more shares of a stock or bond offering when prices are low than when they are high. Over the long term, you’ll purchase more shares when prices are low, and fewer shares when prices are high.
Dollar cost averaging is a systematic approach to investing and does not guarantee positive investment results.
Be sure to use the right tools at your disposal.
The more you understand the driving forces behind the economy and the market place, the better equipped you will be to decide what the right investment moves are for you. Choosing to work with a professional advisor helps you make educated decisions.
Contact us today. We can help you on your path toward achieving your financial goals.