Successful investing requires a steady approach and a long-term perspective. Taking the emotion out of investment decisions is a critical component to successful long-term investing. To shop, compare and review other financial services providers, visit one of the following directories on the Debt Consolidation Loan Directory:
- Personal Loans – Need a smaller loan? Personal loans are most often unsecured. That means you do not have to secure them with personal assets in order to do a debt consolidation. This type of financing is typically based upon your credit history and your ability to make your payments.
- Debt Management Programs – Too many debts and payments to be able to keep up? Compare different debt management services that may be able to help you get control of your bills.
- Debt Consolidation – If you have a large amount of credit card and other debts, now may be a good time to consolidate your debt and lower your payemnts.
If there is one observation that stands out when observing the behavior of emotional investors, it is that markets are unpredictable and guiding your portfolio through turbulent times requires experience, patience, and vigilant management. Because investing involves a number of risks that are often impossible to predict, it is important to moderate these risks by diversifying each portfolio across multiple asset classes to improve the overall portfolio’s risk/reward characteristics. The overall asset allocation strategy employed is the primary factor that determines your investment success. After an asset allocation strategy is developed based on your goals and tolerance for risk, a disciplined approach to monitoring and ongoing analysis of your portfolio will ensure a high probability that you will stay on track to meet your investment goals.
The following five-step framework is one process to consider when formulating an investment strategy:
- Analyze current investment portfolio.
- Design optimal portfolio based on specific situation, goals and risk tolerance.
- Formalize an investment policy.
- Implement portfolio solutions.
- Monitor, analyze, and adapt as needed.
TIP / WARNING: Like with just about anything in life, there are no free lunches when investing your hard earned dollars. Investors are only compensated for the risk they are willing to take. Nobody knows what the market is going to do tomorrow, next week, or next year. It’s this randomness of returns that requires investors to be aware of their risk tolerance and to be invested in a manner that keeps their overall risk parameters at acceptable levels. It’s very common for do-it-yourself investors to be overly aggressive at the tail-end of a market advance and to be too conservative after a prolonged market downturn. Letting your emotions get the best of you and trying to time the market rarely produces acceptable results (Review our series of articles on the “Emotions of Investing“). If you aren’t sure of how much risk you are taking in your portfolio or what is an acceptable level of risk for your particular life situation, seek professional guidance. You can’t afford not to.
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