1.The buy and hold approach helps to manage emotion.
A buy and hold approach is where your advisor buys stocks and holds them for a long period of time regardless of market fluctuations. By holding on to your investments instead of trying to time the market and buy and sell all the time, your advisor can make adjustments to your investments that fall in line with your particular situation and comfort regarding risk tolerance.
2.There is always an element of risk in investing.
There are many different levels of risk when it comes to planning and retirement, and your tolerance for it can have a significant effect on your returns. With high rewards/returns come high risks. Conversely, if you find an investment with almost no risk, its return is likely to be very low. The point is that you can’t avoid risk entirely: an investor who does stands little chance of achieving inflation-beating returns, let alone enough wealth accumulation to fund 20-plus years of retirement.
Figure out what level of risk you are comfortable with when it comes to losses. You can choose from low, moderate or high levels depending on your tolerance. This is all about knowing yourself as an investor: take into consideration your goals, your time horizon for each goal, additional financial assets and the stability of your job as important factors.
3.Understand what you want out of your investment. The closer you are to retirement, the more appropriate less volatile investments can be. But remember, they offer very small returns on your investment. The farther you are away from retirement the more risk you should consider taking. Higher risk has the potential to provide higher significant returns but usually require a long-term investment.
In the end, the best advice you’ll ever receive is to discuss your investment strategy with your financial advisor. We invite you to visit us at mooneylyons.com or call us at 847.382.2600 to speak to us directly.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss.
Solin, Daniel. Debunking 8 Common Investing Myths. U.S. News and Money. 24, Sept. 2014.