Does trying to figure out the ups and downs of the market make your head hurt?
Are you concerned about investing right before a major downturn in the market?
The link below contains insights about how difficult market timing has proven to be and how a long-term approach focused on what you can control has offered a rewarding investment experience.
So, what can you control and what should you focus on?
Consider asking three questions to help evaluate your portfolio strategy:
1. Does my portfolio have an appropriate asset allocation of stocks, bonds, etc?
Everyone’s situation is different. A number of factors should dictate your portfolio strategy, such as your goals, the rate of return needed to reach your goals, and your risk tolerance. Consider if your portfolio strategy is capable of achieving the returns you’re looking for and if it fits your risk tolerance.
2. Does my portfolio have sufficient diversification within those stocks, bonds, etc?
Strong diversification may both protect you from the downfall of one company and also let you participate in the gains of the next Apple or Microsoft. Consider if your portfolio is diversified both domestically and globally and if there is an opportunity to increase your exposure. Diversification does not guarantee better performance or eliminate the risk of loss.
3. Does my portfolio contain any unnecessary costs?
An often-overlooked element of your actual investment return is your costs, such as commissions, taxes, or expense ratios. Your costs compound over time, just like your returns do. Consider if there is a more cost-effective way to still reach your goals.