Having an investment plan that you can stick with—through thick or thin—is very important. If you start to jump in and out, chasing recent performance, then your returns will suffer.
Volatility (price fluctuations), both up and down, are normal and inevitable. The challenge is to be able to live with the plan through good times and bad. Once you have a plan in place, stick with it.
For example, while the S&P 500 is a great investment asset class, there will be times when it underperforms in the short term. In fact, all asset classes have times of disappointment. This is why the key to good investing is to have an investment plan that you can live with for the long term.
Many people decide on their asset allocation from an emotional perspective. However, it is best to make these decisions in a cold and factual manner. Inevitably, people make decisions during emotional moments. These decisions still need to be stuck with, though. What destroys most investment returns is when people shift and deviate from their plan.
Plans do not need to be adjusted unless something has changed in an investor’s life. The money may need to be spent sooner or later, which is when allocations can be shifted. This is when engaging the services of a professional is important.
At WiseFactors, we can put together a great allocation and keep it as part of your plan for a certain length of time. Be sure to create a diversified portfolio. Don’t commit financial suicide. Contact us today.