INVESTING REQUIRES PATIENCE
Resist over-reacting to headlines and take the long view of stock market investing. Impulsive selling can lead an investor to try and time the market later, and market timing usually leads investors to make mistakes.
STOCK MARKET INVESTING IS A LONG-RUN PROPOSITION
On a bad day, it may seem like the whole market is falling apart – but stock market performance is not measured in days, you are investing for a lifetime.
TAKE ADVANTAGE OF MARKET DOWNTURNS
Those who sell when the market is down often buy back in well after the market recovers. Selling low and buying high is a formula for disappointment. Staying invested through market downturns positions you to buy quality shares when they are cheaper, and when stocks rally, you are in the market and ready to benefit.
PERIODICALLY RE-BALANCE YOUR INVESTMENT PORTFOLIO
The degree of risk in your investment portfolio should reflect your current financial goals. If you intend to use stock and bond funds to supplement your retirement income, talk to your investment advisor about reducing your risk as you approach retirement age.
TOO MUCH INFORMATION?
Recognize that having instant access to account values and market news may cause a very short-term orientation, leading to a tendency to trade more often than in the past when information wasn’t so pervasive.
DEMOCRAT OR REPUBLICAN?
You may feel strongly about one party or the other when it comes to your politics, but when it comes to your portfolio, it doesn’t matter much which party wins the White House. Conventional wisdom might suggest that Republicans, who are supposedly more business-friendly than the Democrats, would be more beneficial for your stock holdings. In fact, looking back to 1900, Democrats have been slightly better for stocks, with the Dow up an average of nearly 9% annually when the Democrats are in control, compared with nearly 6% per year during Republican administrations. But normal variations in annual stock market returns dwarf that difference, says Russ Koesterich, chief investment strategist at BlackRock. He concludes that a focus on which party wins the White House is unwarranted—at least from an investing standpoint.1
FOCUS ON WHAT YOU CAN CONTROL
Set a personal financial goal and stick to it. Pay yourself first, saving consistently and determine the amounts needed to save for college or fund your retirement. Even small changes like bringing your lunch to work or dropping premium cable can add up over time. 2
2 “Paying Yourself First” Wells Fargo Bank, N.A. www.https://www.wellsfargo.com/financial-education/basic-finances/manage-money/ cashflow-savings/pay-yourself-first/
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