These simple steps are what Traditions Wealth Advisors does daily to set your mind at peace with your investment results.
Step 1: Make a plan you CAN stick to.
An investment plan takes many factors into consideration, such as
your financial and retirement goals, your current savings, and your
tolerance for unexpected market fluctuations. Once you determine
your objectives, you can decide the best mix of investments to help
you achieve them. Although it's natural to want the highest return
possible from your portfolio, it's also important to consider the
temporary losses you're willing to withstand in negative markets, so
you're not tempted to abandon your investment plan during
inevitable periods of anxiety and discomfort.
Step 2: Rebalance periodically.
After you determine your optimal mix of investments, you shouldn't
need to make frequent changes to your portfolio. In fact, research
has shown that trading too often can lead to underperformance
over time. Still, as markets rise and fall, your asset allocation can
drift from its original targets, changing the overall risk and return
profile of your investment portfolio. To ensure your portfolio stays
aligned with your future goals and risk tolerance--and to maximize
your results over time--it's important to periodically take gains from
investments that have risen in value and use the proceeds to buy
more of the investments that have declined in value.
Step 3: Check your account balances less.
Nobel Prize-winning behavioral economists Richard Thaler and
Amos Tversky found that investors who check their account
balances frequently are less willing to take on risk, which ultimately
causes them to fall short of their financial goals. A healthy amount
of risk is necessary to grow your assets over the long term. If you're
prone to panicking when markets fall, the best solution is to check
your accounts no more than once per quarter.
Further questions on these simple steps? Please contact us at Brien@TraditionsWealthAdvisors.com or 979-694-9100.