|Avoid these scary investment moves
It’s Halloween time, so you’ll probably be seeing a lot of ghosts, goblins, witches and werewolves. While you may find these sightings more amusing than frightening, you don’t have to look far to find things that really are frightening, like scary investment moves.
Fortunately, by recognizing these sinister steps, you can help avoid them. Here are a few to consider:
• Trying to “time” the market. If you always knew when to “buy low and sell high,” you’d be a tremendously successful investor. Unfortunately, no one can accurately predict highs and lows, and if you try to jump in and out of investments in response to speculation about where the market is heading you could end up missing good opportunities. You’re typically better off by staying invested and investing based on your individual risk tolerance, time horizon and need for diversification. (Keep in mind, though, that diversification, by itself, cannot guarantee a profit or protect against a loss.)
• Chasing after “hot” tips. You can get “hot” investment tips from anybody - your neighbor, your brother-in-law or even that guy you always see at the bus stop. But while these tips may be well intentioned, they may be flawed, for a couple of reasons. First, if an investment really was “hot,” by the time you hear about it and get around to purchasing it, it may already be cooling off. But more importantly, it might not be suitable for your individual needs. Look for investments that you understand and that can help you meet your goals.
• Investing too aggressively or too conservatively. If you invest too aggressively, you could be taking unnecessary chances. On the other hand, if you invest too conservatively, you may never achieve your long-term objectives. Try to find a mix of investments that fits your individual risk tolerance.
• Leaving your portfolio “unbalanced.” Over time, your individual situation will change, as will the fundamentals of some of the investments you own. That’s why it’s important that you regularly rebalance your portfolio, possibly with the help of an experienced financial professional.
• Failing to take advantage of investment opportunities. To help meet your goals, such as a comfortable retirement, it’s important to take advantage of suitable investment opportunities. Contribute as much as you can afford to your 401(k) or other employer-sponsored retirement plan, as well as your IRA and other retirement accounts you may have. As an investor, your greatest ally is time, so the more years you invest - especially when you’re investing in tax-advantaged accounts such as a 401(k) and an IRA - the greater your prospects for achieving your financial objectives.
You can’t elude all the pitfalls that life may hold in store. But by avoiding these terrifying investment moves, you can help improve your prospects for long-term success - and that’s not a scary thought at all.
Ken Weise is a financial advisor at Edward Jones Investments in Rohnert Park. He has been helping individual investors and small businesses reach financial goals for over seven years. He can be reached at 584-4146.