Your investment goals are as unique as the route you take to reach them. But regardless of your course, we believe these 10 “rules of the road” can help you get where you want to be.
1. Develop your strategy
Your financial advisor gets to know you – your long-term goals, investment time frame and comfort level with risk – before recommending a strategy. The more you can outline what you are trying to achieve, the more he or she can tailor your strategy to you.
2. Understand risk
As a rule, the higher the return potential, the more risk you’ll have to accept. To determine what makes sense for you, your financial advisor will want to know:
- What is your comfort level with risk?
Understanding this can help him or her determine how you may react to market ups and downs over time.
- How much risk are you able to take?
The amount of time you have to invest plays an important role in determining how much risk you’re able to take.
- How much risk do you need to take?
Your financial advisor will want to determine the return, and therefore the risk, that may be necessary to reach your long-term goals.
3. Diversify for a solid foundation
Your portfolio’s foundation is your asset allocation, or how your investments are diversified among stocks, bonds, cash, international and other investments. Your mix should align with your goals and comfort with risk.
4. Stick with quality
Of all the factors to consider when investing, Edward Jones believes quality is one of the most important. It’s also one of the most overlooked. Although it may be tempting to buy a popular investment, it may not fit with the rest of your portfolio, and it may be riskier than you expect. If it sounds too good to be true, it probably is.
5. Invest for the long term
Despite stories of fortunes made on one or two trades, most successful individual investors make their money over time, not overnight. One of the biggest mistakes you can make is trying to “time” the markets.
6. Set realistic expectations
First, you’ll need to determine the return you’re trying to achieve – which should be the return you need to reach your goals. Then you can base your expectations on your asset allocation, the market environment and your investment time frame.
7. Maintain your balance
Your portfolio’s mix could drift from its initial objectives from time to time. You can rebalance to reduce areas where your investments are overweight or add to areas where they are underweight. By rebalancing on a regular basis, you can help ensure your portfolio remains aligned with your objectives and on track to reach your long-term goals.
8. Prepare for the unexpected
Unforeseen events could derail what you’re working so hard to achieve. By preparing for the unexpected and building a strategy to address it, you’ll be better positioned to handle the inevitable bumps along the way.
9. Focus on what you can control
You can’t control market fluctuations, the economy or the political environment. Instead, you should base your decisions on time-tested investment principles, which include:
- Diversifying your portfolio
- Owning quality investments
- Maintaining a long-term perspective
10. Review your strategy regularly
The one constant you can expect is change. That’s why it’s so important that you and your financial advisor review your strategy on a regular basis.
Think of your financial advisor as your navigator on this journey. By working together to regularly review your strategy and make the adjustments you need, you can have a clearer picture of where you stand and what you need to do to help reach your goals.
How we can help
If your financial situation or goals change, talk with your Edward Jones financial advisor to discuss what, if any, changes you may need to make to your strategy. If it’s been longer than a year, sit down with your Edward Jones financial advisor for a complete review.
Insurance and annuities are offered by Edward Jones Insurance Agency (except in Québec). In Québec, insurance and annuities are offered by Edward Jones Insurance Agency (Québec) Inc.