We’re closing in on the Super Bowl — the first Super Bowl held in an outdoor, cold-weather site. The 2014 game shares similarities to past Super Bowls in what it took for the two teams to arrive at this point. Some of these same characteristics apply to successful investors.
• A good offense. Most Super Bowl teams are adept at moving up and down the field and crossing the goal line. Good investors know how to choose investments that provide them with the gains they need to keep moving toward their goals. At every stage of your life, you need to own a reasonable percentage of growth-oriented investments, such as stocks and stock-based vehicles.
• A strong defense. A good offense isn’t enough to vault a team into the Super Bowl, which is why most have strong defenses. Similarly, the best investors don’t put all their money in a single aggressive instrument and then forget it — they know that a downturn could prove extremely costly. Instead, they “defend” their portfolios by diversifying among a range of stocks, bonds, government securities, certificates of deposit, and so on. Although diversification can help reduce the impact of volatility, it can’t guarantee a profit or always protect against loss.
• Perseverance. Every team that makes it to the Super Bowl has had to overcome adversity — injuries, bad weather, etc. Successful investors also overcome hurdles, such as bear markets, bad economies, political battles and changing tax laws. Through it all, these investors stay invested, follow a long-term strategy and continue to look for new opportunities — their perseverance is often rewarded. Follow their example by not jumping out of the market when the going looks tough and not overreacting to scary-sounding headlines.
• Good coaching. Super Bowl teams need coaches who analyze situations and make the right decisions at the right times. Investors also benefit from “coaching — in the form of guidance from financial professionals. It’s not easy for busy people to study the markets, stay current on changing investment-related laws, monitor their portfolios and make changes as needed. By working with a financial professional you will find it much easier to navigate the complex investment world.
As we’ve seen, the same factors that go into producing a Super Bowl team are also relevant to investors. Incorporate these behaviors and attitudes to follow a pretty good “game plan.”
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Information from Edward Jones, provided by Jim Talley, financial advisor at Edward Jones, 2703 Beaver Ave., 279-4179.