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‘Rules of the road’ for investors

Posted January 08, 2014 in Advice Column, Des Moines West

As an investor, you may wonder what on earth is going on in the financial world. The stock market is down 200 points; next day it’s up 300. Isn’t there any smooth route for you to follow as you pursue a comfortable retirement and other key objectives?

Actually, there isn’t. Smooth out your journey by following a few basic “rules of the road.”

•    Create a plan. You can waste time, effort and money through haphazard investing. Create a plan that defines your long-term goals and establishes a strategy, taking into account your tolerance for risk and time horizon.

•    Take action. The best plan is useless unless it’s implemented.  Don’t wait for the “time to be right.” You can always find excuses to delay. The best time is right now.

•    Stay invested. It takes courage to invest during a long bear market. It’s essential that you stay invested, through good times and bad. The long-term performance of the investments have more impact on your portfolio›s success than daily price fluctuations.

•    Look for quality. You need to be investing in quality. Look for companies that have solid track records, strong management teams, competitive products and well-defined business plans. You’ll experience ups and downs. Hold them over time for success.

•    Diversify holdings. You’ll be better by diversifying your dollars among a wide range of high-quality stocks, bonds, mutual funds, government securities and other vehicles. You’ll help cushion yourself against downturns affecting just one type of investment — and you’ll multiply your opportunities of benefiting from assets that are performing well.

•    Review your plan. Review plans at least once a year. Life will constantly be evolving, and you may need to adjust your plans. If some investments no longer suit your needs, you’ll need to find other opportunities. A qualified financial professional can help evaluate your situation and make appropriate recommendations on rebalancing your portfolio.

As you can see, there’s nothing magic, or even terribly complex, about any of these “rules for the road.” However, to follow these guidelines, you’ll need patience and perseverance. If you’ve got these traits, then you’re well prepared for a fulfilling investment journey.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisors.

Information provided by Pete Scheurman, Financial Advisor, Edward Jones, 1129 42nd St., Des Moines.

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