Just a couple reminders…

No journey is without danger – and when you’re investing there’s always the risk that you’ll lose money. But you stand a better chance of staying on track by keeping emotion in check and avoiding some common mistakes;

  • Market-timing. Within the last few years, I am sure a number of investors swayed from their long-term objective due to the waves of volatility.  Some may have been able to capitalize on it, but many always make the adjustment too late.  You can’t predict the market, so resist the urge to make major changes to your portfolio on a whim. 
  • Chasing performance. Similar concept to market timing, but this is basing your investment decisions on what the market did yesterday and it is like trying to drive by looking only in your rearview mirror. Past performance can tell you some useful things, but it’s no guarantee of future results.
  • Miscalculating risk. Everyone has a certain comfort level when it comes to investment risk.  Mark Drachenberg, our lead Portfolio Manager, calls it our “sleep at night index”.  Know your risk tolerance, know the amount of volatility you can handle without losing sleep and then allocate your assets accordingly. 
  • Overweighting. Are all of your eggs in one basket? It can be tempting to load up on one particular type of investment, especially when that investment is doing well. But in doing so, you could be inviting misfortune.
  • Overlapping investments. You can mitigate risk by owning several different mutual funds. But funds with widely different objectives can have overlapping holdings. You might be surprised to find that you’ve invested in the same company several times.


Some things to remember;

  • Tune out the noise – Right now the market is having a pretty good run.  As of the market close today, the DJIA is up over 13,000 for the first time since 2008.  It may have some more room to run; or we may be running out of gas…it’s hard to tell.  Kin to selling out at the bottom don’t go all in at the glimmer of recovery.  We may not be out of the woods yet.
  • Set the GPS – As investors, you need to know where you are going.  As a famous financial institution’s marketing campaign states it, you need to know “what your number is”.  Start with how much income you will need from your portfolio; this is called the withdrawal rate.  From there, you will be able to determine what your retirement portfolio needs to be at by the time you retire.  How far are you away from that number?  How much more do you need to contribute to your portfolio?  How long do you have until you start withdrawing?  What is your realistic rate of return?  Answers to these questions will help you set your parameters.     
  • STAY ON COURSE! – Your investment plan is only as good as your willingness to follow it.  Don’t get me wrong, adjustments are necessary and checking your asset allocation at least once a year is needed.  There is a difference between making adjustments and trying to time the market.  So stay on course but be weary of obstacles.

Let us know if we can help you get where you want to go.


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