Four Tips for Your Wealth & Sanity

​Investing can be stressful, but it doesn’t have to be. If you have a well-built portfolio, understand what you own, and have a plan, then you shouldn’t be too worried about market volatility and what the financial pundits are saying.

Here are a few tips to help you invest wisely and stay sane at the same time.

1. Cut back on financial (entertainment) media. The financial news might be entertaining, but unfortunately, the focus is on short-term trends, hype, and fear. Sure, you need to keep up with general economic and business news, but it isn’t wise to stress and/or trade on every piece of information that you come across.
2. ​Stop checking your accounts online every day. If you have a properly diversified portfolio, focusing on daily, weekly, and even monthly changes in your account value is likely to tempt you to make irrational decisions. It’s important that you understand the various investable markets are volatile, even more important than this, is that you remain rational and disciplined.
3. Clean old junk from your portfolio. Do you have stocks you held for a while, just waiting for them to return to the price you bought them? Do you have a fund that persistently performs poorly during both good times and bad? A good way of knowing whether to hold certain stocks or funds is to ask yourself whether you would buy them today as new positions. Investors often think they need to wait until the stock price comes back before selling. It might be prudent to cut your losses and rid your portfolio of those old underperformers. You will feel like a weight is lifted from your shoulders, and you can use that money on better prospects.
4. Create a plan and stick to it. One of the biggest mistakes that investors make is failing to make a disciplined plan. From this plan you can then design and build an overall asset allocation (mix of stocks, bonds, alternatives, real estate, and cash, and then stick to it. When needed, make changes to bring your asset allocation back to the proper proportion due to the various market movements. This is called rebalancing, and it is a great risk management tool and a process of buying low and selling high.

Hopefully, taking a step back from your investing life gives you greater peace of mind and lets you focus on family, friends, your personal goals and living a fulfilling life.

-Paul R. Rossi, CFA