These daily financial tips are designed to be short ideas covering different aspects of family and business finances. They are short pieces intended to provide information to enable individuals, families and businesses to make informed financial decisions. Not all tips will apply to every situation, but over the course of a year, most financial topics will be covered. Check in regularly and share with friends and associates.
I am often asked by clients to purchase XYZ stocks, or they don’t want to invest at the moment because ‘markets are due for a correction’, etc, etc. I can only surmise that many of these thoughts and judgements are formed based on conversations with friends or news stories. Stories abound of people trying to time the markets. This is very difficult to do, if not impossible – even for financial and investment professionals. While investors should question the reasons their investment advisors recommend certain investments, etc, they shouldn’t necessarily be trying to perform the role of their investment advisor.
Many studies have demonstrated that trying to time market investments has adverse effects on the long term value of investments. Of greater importance is ensuring that the investment mix of your investment holdings (ie. Cash, Bonds, Stocks, Real Estate) matches your investment objectives, your timelines and risk tolerances. Everyone’s mix of investments will be different given their family and work circumstances, their goals and timelines.
The proportional investment mix is not static. It will change over time as family and work circumstances change, goals will change and timelines will change. Market conditions also change which may require adjustments to your portfolio asset mix. Your investment portfolios should be reviewed regularly to ensure the asset mix remains appropriate for your circumstances. At very least a review should be done annually. If you are uncertain about the performance or relevance of your asset mix, for any reason, reach out to your investment advisor and ask questions. Periodic adjustments may be required.
As an investment saying goes: “ It’s not about timing the market, but time in the market” .
Share these ideas with friends and family and come back to check out daily financial tips and ideas. If there are subjects you wish covered or questions, please email me and I’ll include them in future posts.