6 Key Tips for Long-Term Investors
Keep this list on your refrigerator or your mantle; these are ideas that should begin as obvious and become essential, notes Janet Brown in NoLoad FundX.
Our primary purpose is to help investors achieve their long-term investment goals. Our Upgrading and Flexible Income strategies helps investors create and manage productive portfolios and guides them, step by step, to be successful long-term investors. Here are six ways to get ahead:
1). Reliable Process - Behind every successful investor, there's a plan. Your process should give you a framework to manage the inherent uncertainty in the market. A plan helps you stay invested through up and down markets. Some investors hire financial advisors to provide a plan, while others rely on newsletters like NoLoad FundX.
2). Invest, Invest, Invest - In order to build wealth, investors must be invested and participate in the market. Successful investors don't just invest once and wait for their money to grow. They continue to invest, adding new money, and putting the power of compounding to work for them.
3). Balance (& Rebalance) Your Portfolio - The key to staying invested over the long term is finding a comfortable allocation that provides enough growth that you can fund your goals and enough stability that you can stay invested long enough to achieve your goals. For most investors, that means owning both stocks and bonds. Along with a balanced allocation comes the need for periodic rebalancing. Investors who rebalance have the added advantage of selling stocks into strength and buying into weakness.
4). Manage Risk, Don't Avoid Risk - Most of us can't get where we need to go without taking on some risk, so learning to manage risk is a crucial part of investing for the long term. Too often investors avoid risk by staying out of the market in strong years like 2012. When they get back in the market, they may take on too much risk in an effort to try to make up for lost time. But moving all in or all out of the market doesn't pay off over time. A better solution is to find an allocation to stocks and bonds that you can stick with in up and down markets.
5). Recognize Markets Change - Long-term investors expect that markets will change over time. They don't let short-term market action distract them from their long-term goals. No one truly knows what the future holds, and market changes often turn out differently than anyone expects, so accept some degree of uncertainty—and find a system that can help you make decisions without having to forecast the future.
6). Change Your Portfolio when Markets Change - Don't stick with lagging funds. Realign your portfolio to take advantage of new trends as they emerge. The FundX ranks lead you to the funds that are bringing in the best returns in the current market environment.
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