E.F. Heagen & Associates

(949) 487-6711

Investment Read Time: 2 min

Diversification, Patience, and Consistency

Regardless of how the markets may perform, consider making the following part of your investment philosophy:

Diversification. The saying “don’t put all your eggs in one basket” has some application to investing. Over time, certain asset classes may perform better than others. If your assets are mostly held in one kind of investment, you could find yourself under a bit of pressure if that asset class experiences some volatility.

Keep in mind that diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Asset allocation strategies also are used in portfolio management. When financial professionals ask you questions about your goals, time horizon, and tolerance for risk, they are getting a better idea about what asset classes may be appropriate for your situation. But like diversification, asset allocation is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Patience. Impatient investors can get too focused on the day-to-day doings of the financial markets. They can be looking for short-term opportunities rather than longer-term potential. A patient investor understands that markets fluctuate, and has built a portfolio based on their time horizon, risk tolerance, and goals. A short-term focus may add stress and anxiety to your life, and could lead to frustration with the investing process.

Consistency. Most people invest a little at a time, within their budget, and with regularity. They invest $50 or $100 or more per month in their retirement account or similar investments. They are investing on “autopilot” to help themselves attempt to build wealth over time.

Consistent investing does not protect against a loss in a declining market or guarantee a profit in a rising market. Consistent investing, sometimes referred to as dollar-cost averaging, is the process of investing a fixed amount of money in an investment vehicle at regular intervals, usually monthly, for an extended period of time regardless of price.

Investors should evaluate their financial ability to continue making purchases through periods of declining and rising prices. The return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

If you don’t have an investment strategy, consider talking to a qualified financial professional today.

The 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. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. 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. Copyright FMG Suite.

Share |
 

Related Content

Success in Their Own Words

Success in Their Own Words

Why freedom, not money, is the mark of financial success and other surprising insights from professional representatives.

When Does Your Personal Car Become a Commercial Vehicle?

When Does Your Personal Car Become a Commercial Vehicle?

At what point can you call a personal vehicle commercial?

You Are Not Alone it Just Feels That Way

You Are Not Alone it Just Feels That Way

Let’s start getting your financial priorities and attitudes in sync with model behaviors.

 

Have A Question About This Topic?







Thank you! Oops!

Gap Insurance for Leased Cars

If you’re thinking of leasing a new car, then you shouldn’t forget about gap insurance.

Pickleball in Retirement

Learn about the latest sport to sweep the nation with this informative article.

Term vs. Permanent Life Insurance

When considering life insurance, it's important to understand your options.

View all articles

Home Mortgage Deduction

Use this calculator to assess the potential benefits of a home mortgage deduction.

Taxable vs. Tax-Deferred Savings

Use this calculator to compare the future value of investments with different tax consequences.

Federal Income Tax

Use this calculator to estimate your income tax liability along with average and marginal tax rates.

View all calculators

Your Cash Flow Statement

A presentation about managing money: using it, saving it, and even getting credit.

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Managing Your Lifestyle

Using smart management to get more of what you want and free up assets to invest.

View all presentations

The Cost of Procrastination

Procrastination can be costly. When you get a late start, it may be difficult to make up for lost time.

The Independence of Financial and Emotional Well-Being

Greater financial and emotional confidence brings greater independence. Isn’t that what it’s all about?

What You Need to Know About Social Security

Every so often, you’ll hear about Social Security benefits running out. But is there truth to the fears, or is it all hype?

View all videos