Published in the May 27-June 9, 2015 issue of Morgan Hill Life
By Marisa Otto
Marisa Otto
May is National Physical Fitness and Sports Month. This “month” is designed to encourage people to follow a healthy, active lifestyle. You can take steps toward this goal, of course, but why not carry the concept of improving health to other areas of your life — such as your investments?
Consider these suggestions:
• Give your portfolio a regular “check-up.” To maintain your fitness, it’s a good idea to visit a doctor for a check-up on a regular basis. And to help ensure the “health” of your portfolio, you may want to periodically review it with the assistance of a financial professional — someone who can point out gaps in your existing holdings or changes that may need to be made.
• Follow a balanced investment “diet.” Nutrition experts recommend that we adopt a balanced diet, drawing on all the major food groups. Too much of any one category — for example, an excess of meat or of dairy products — can lead to health concerns. An analogous situation exists when you invest — if you own too much of one particular asset class, such as aggressive growth stocks, you might expose yourself to an “unhealthy” degree of risk. You could take a big hit during a market downturn.
But not all investments move in the same direction at the same time, so if you own a mix of stocks, bonds, government securities and other vehicles, you can lessen the impact of volatility on your portfolio. In investing, as in all walks of life, balance and moderation are important.
• Don’t let investments get “lazy.” Exercise is essential in staying fit and healthy. Yet, exercise can also be hard work, causing many of us to put it off to another day. Some of your investments may also not be working hard enough for you. You might own quite a few certificates of deposit (CDs). There’s nothing wrong with CDs, and they do offer a high degree of preservation of principal, but they provide very little in the way of return, particularly in a low-interest-rate environment, such as we’ve experienced during the past few years. If you have a plethora of CDs, you might be depriving yourself of the opportunity to own other investments that “work harder” by offering you the growth potential you’ll need to make progress toward your long-term goals.
• Avoid “unhealthy” habits. Many of us are guilty of unhealthy habits, such as eating too much or failing to address stress. Taken together, these bad habits can harm the quality of our lives. As an investor, you can also fall into some bad habits. You could waste time and effort by chasing after “hot” investments, which may already be cooling off by the time you hear about them. Or you could decide to take a “time out” from investing when the markets are turbulent.
Another bad habit is investing either too aggressively or too conservatively for your goals and risk tolerance. By avoiding these and other negative habits, you can help yourself stay on track toward your objectives.
Marisa Otto, CFP®, Financial Advisor, Edward Jones U.S.A., can be reached at (408) 778-4400, at [email protected] or visit www./edwardjones.com.
