Category: Investments

History shows that every investor needs to cling to these well-known fundamentals to build toward their financially-secure future.

Remain Calm.

Resist the urge to overcorrect when the market drops. Selling in a panic means you could miss out on any potential recovery.

Stay Invested.

Even the experts cannot predict when markets may turn. Trying to “time the market” usually leads to poor decisions.

Stick to Your Strategy.

Stay the course by maintaining a balanced mix of assets aligned with your needs, goals, time horizon, and risk tolerance.

Diversify.

You can create a somewhat shock-resistant portfolio by owning a diverse variety of assets.

Rebalance.

Market fluctuations can throw your investment mix out of line with your objectives. This means you may have to buy or sell assets to maintain your desired level of risk.

Be Patient.

Recoveries to new highs historically follow significant stock market declines. Sometimes, it takes weeks, and sometimes, years.

QUESTION:

My husband and I approach investing differently. Is this the norm?

ANSWER:

Quite often, it is. According to studies by the University of California, Berkley and Nerdwallet, more men (68%) hold stocks than women (48%), and men trade about 45% more often than women. Women are less likely to feel educated about and confident in choosing investments.

These findings don’t mean men’s approach to investing is better; it is just different. Women investors (66%) make up for lesser knowledge and confidence by seeking professional assistance.

They’re also more risk-averse than men and hold their investments longer — traits that may potentially give women a leg up on consistent long-term returns.

Investing can be a stimulating diversion from the demands of work or just added stress. If you’re in the second camp, there’s an investment approach that might appeal to you.

DOLLAR-COST AVERAGING

Dollar-cost (DCA) averaging emphasizes consistent investing regardless of market ups and downs. With DCA, you invest in a security over time in regular, equal amounts rather than a lump sum. That way, you don’t have to worry about timing your investment to buy it at the lowest price. You’ll be investing at both low and higher prices, which can potentially even out your purchase costs and provide more consistent investment returns over time.

NO GUARANTEE

Dollar-cost averaging doesn’t guarantee a profit or protect against loss. At times, it can underperform lump sum investing. And you need to consider whether you’re comfortable weathering short-term market ups and downs.

But if implementing DCA and simply keeping yourself updated on your portfolio sounds attractive, this strategy may be the way for you to go for long-term investments. Your financial and tax professionals can provide guidance.