Taking stock of your investment strategy
Investing in your future and watching your assets grow can be quite a thrill. But with so much information online, it can be difficult to know what’s helpful and what’s hokum. An experienced advisor can help you navigate through the complexities of the market. Here are a few points to show you what we mean.
The Risks of Investing in Individual Stocks
Remember Enron? Such a large, successful company was very tempting to invest in – maybe even a huge percentage of your assets. They seemed too big to fail, right? Investors never really know what could be happening behind closed doors. Anything from legal problems to management issues can put these companies at risk for shutting down and you losing your money.
Index Funds & ETF’s
When you invest in any single stock, you take a risk. That’s why diversification is key. Spread your risk out by investing in funds of stocks. Rather than investing in one holding, index funds can invest in hundreds, increasing your diversity and lowering your risk. ETF’s (Exchange Traded Funds) can cost less than investing in active mutual funds and offer better tax benefits.
Slow and Steady Wins the Race
Trying to outperform the market consistently no longer exists. Watching the ups and downs can be a wild, emotional experience. Basing your decisions on fear and misinformation is not beneficial to building your wealth in the long-term. Choosing an experienced adviser who can diversify your assets will help you stay the course.
With so many things to stress us out already, don’t give yourself another burden by hinging your future on risky investments. Large companies fail, putting all your eggs in one basket can be thrilling but unwise. Think about the wisdom you have learned over the years – building your wealth is very similar, it takes time and experience.