An Investment Strategy: Who Needs One?
If you haven't already mapped out a strategy for investing, you need to. Coming up with a plan to identify your goals and the best way to reach them should be part of your financial planning. Here are some reasons why.
Face it — the stock market can be volatile. Sure, everyone's happy when stock values are rising. But when prices start to plummet, many investors are tempted to get out of stocks and into more stable investments. While that move might preserve your current gains, in the long run, selling stocks could prevent you from benefiting from future market upswings. Sticking with a well-thought-out investment strategy can help you ride out any bumpy markets on the way to reaching your goals.
A Pinch of This, a Sprinkle of That
Part of any investment strategy is making sure your portfolio is diversified. If you're not following a plan, you could wind up with too many similar investments. Owning investments from many different industries, economic sectors, and asset classes can help cushion your portfolio against major losses. When some investments are losing value, others may compensate by doing well. And that can help reduce your risk.*
For Good Measure
Reviewing your investments' performance is important, but you can have too much of a good thing. Reviewing performance too frequently may cause you to make changes based on short-term market fluctuations. Your investment strategy should include a time frame - possibly annually or semiannually - for checking to see if your investments have performed as expected. Then, make any changes that are needed to move you closer to your goals.
For more information on investments, please contact Steve O'Steen at 813-223-6338.
* Diversification does not ensure a profit or protect against loss in a declining market. Article is for educational purposes only and is not intended to provide specific tax or legal advice. For answers to tax questions, please see your tax professional. For legal questions, consult an attorney.
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