When It Comes to Investing, Focus On What You Can Control
Don't be distracted by the latest headlines. Base your behavior on time-tested investment principles.
By: Edward Jone
When investing, there are some things you can't control – the day-to-day fluctuations of the market, the economy, the political environment. The good news is you don't have to.
Too often, investors can become distracted by the latest headline or "expert" prediction. We believe one of the keys to success is to ignore these predictions and instead base your decisions on time-tested investment principles, which include:
• Diversifying your portfolio
• Owning quality investments
• Maintaining a long-term perspective
Your emotions and your success
Investors' reactions to market fluctuations – rather than the fluctuations themselves – often prevent them from reaching their goals. They tend to buy when the markets are up and they feel good, and to sell during declines – essentially buying high and selling low. Not surprisingly, this is not a successful long-term strategy. The key is to not let your emotions control your investment decisions.
Focus on your strategy
When the markets are up, it's important to ask, "Am I now overweight in stocks and taking more risk than I need to, based on my long-term goals, and should I be rebalancing?"
If your goals haven't changed, and the events don't change your long-term outlook, there probably isn't a reason to make changes to your strategy. In fact, these declines can present good opportunities for long-term investors. So talk to your financial advisor about ways you might use the normal fluctuations in the markets to your advantage.
Edward Jones - Mae Luchetti