Are you making money in today’s market? Have you cashed in all your investments? Does your new investment strategy include cash and your mattress? Here are a few pointers to help you turn your economic frown upside down.
This should be pretty self explanatory but just in case… How often have you been able to make clear decisions while panicked or angry. Whenever we are worried, angry or in an otherwise troubled emotional state or bodies begin pumping adrenaline and other chemicals into our systems. This can help us react physically faster but it clouds our thinking. Decisions made while our mind is clouded with chemicals are usually poorly thought through and you might as well roll dice for all the good it’ll do you.
Risk is your Friend, or your Enemy
Since you’ve already lost a bunch of money now is a good time to reevaluate your risk profile. Your financial manager had you fill one of these out right? Make sure that you are invested correctly based upon your ability to see you money evaporating. Just remember that its quite unlikely that we have hit bottom yet. Most recessions have a double dip effect, essentially a fake recovery before the real bottom of the market is found. Your risk profile is very likely to be tested again so make sure you are quite honest with yourself.
Several studies have shown that people who watch their portfolio less actually make more money over the long term. The reasons for this are quite interesting because you would think the opposite should be true. Quite simply what happens is that most consumers find out about the problem far too late for them to avoid loosing money so if/when they discover a problem and try to make a correction they have accidentally committed the number 1 no-no in finance, buy high, sell low. People who ensure their portfolios are sufficiently diversified and acceptably managed and then only look in monthly, or annually have on average made a fair bit more money over time then those who are more involved.
Don’t forget about your money. It is yours, remember. Making changes every month can get you into trouble. Checking out your portfolio each year is a very good idea. This way your financial adviser can discuss the course your money is currently taking as well as make sure you are still on plan. Then make adjustments as required to keep on your long term plan. The future may be unpredictable but I can predict one thing for you. Each day is different and making your long term decisions based upon the current economy will make things difficult for you.
These are some simple steps that will help keep you on track and making money over the long term.