Navigating the Investing Rules of the Road

Most individual investors make their money over time, not overnight. While your strategy may differ based on your personal needs, successful investors tend to follow the same set of guidelines.

As is often true in life, the rules are simple but not always easy to follow. We hope these guidelines will be helpful to you as you consider your own investment decisions.

Develop a strategy

Successful investing requires you to set specific objectives and steps for reaching your financial goals. It also requires discipline and more than a little patience. That's why your Edward Jones advisor will work with you to create an investment strategy, which can help provide all of these. 

As you make investment decisions, your strategy will help you stay focused on the long term so it will be easier to say no to potentially speculative investments that might become temporarily popular. 

One of the most valuable services your Edward Jones advisor can provide is helping you develop a long-term strategy designed to help you meet your personal goals. Over the years, he or she can also help provide the discipline you’ll need to ignore short-term distractions.

Stick with quality

If you’ve gotten any tips on today’s "hot" investments, the best advice we can offer is this: Ignore them. At Edward Jones, we’re not big on investment fads. In our experience, investment success comes from buying and holding quality stocks, mutual funds and bonds in a well-diversified portfolio and maintaining a long-term perspective.

When buying bonds, it’s important to focus on quality, or those rated “investment grade.”1 When buying stocks, no single attribute defines quality, but we recommend you look for well-managed companies with long track records of growth and performance. Similarly, mutual funds that own these types of stocks and bonds are what we would call quality. We recommend you look for mutual funds with experienced management teams that don’t hold the top-performing spot for the previous year.

Remember, if it sounds too good to be true, it probably is.


Although you can’t control marketing movements or fluctuating investment prices, you can diversify your portfolio to help smooth out the ups and downs. Diversification spreads your money among a variety of quality asset classes and investment types so success isn’t tied to one company or one type of investment.

How do you make sure your portfolio is adequately allocated and diversified? We recommend you review your portfolio at least once a year. If it has been more than 12 months since you last met with your Edward Jones advisor to review your portfolio, do yourself a favor and schedule a review today.

Invest for the long-term

To help achieve sustained growth, one of the best strategies is to seek steady, reliable results over a long period of time. There are no guarantees when investing, but we believe a buy-and-hold strategy is the best to help build and preserve your long-term financial security.

Don’t let short-term price considerations scare you away from a long-term value. If you invest in stocks or stock mutual funds, a temporary price decline often creates an opportunity to add to your holdings at a lower cost.

Address mistakes quickly

Over a lifetime of investing, all investors are bound to make mistakes. The best way to avoid making them worse is to review your portfolio at least annually. Remember, “buy and hold” doesn’t mean “buy and ignore.”

Short-term setbacks or temporary changes in the economy aren’t reasons to sell a quality investment. However, fundamental changes in the investment itself are a reason to review it to help ensure it’s still appropriate for you.

Understand risk & take steps to help reduce it

Credit risk, market risk, interest rate risk, inflation risk: Every investment carries some form of risk. The amount of risk you take can often go hand in hand with the potential return an investment offers. It’s important to understand investing risks and take steps to help reduce them. It's also important to help protect against the "what ifs" of life. Consider life, disability and long-term care insurance as part of your overall financial strategy.

It's not what you make, it's what you keep

While the tax code may be complex, the solution doesn’t have to be. Tax diversification may help you improve your after-tax returns by owning an appropriate mix of taxable and tax-advantaged investments help reduce sensitivity to changing tax rates. Your Edward Jones advisor can work with your tax and legal professionals regarding investment decisions that can impact your tax situation.

Quality stocks have historically outperformed quality bonds

As people age, some think they should replace all their stocks and mutual funds with fixed-income investments, such as bonds or CDs. However, given the length of time most of us will spend in retirement – likely 20 years or more – investments with growth potential may be key to helping you save for and live comfortably in retirement.

Your investments need to keep up with inflation to help ensure that you can maintain your standard of living as prices rise. Equities – that is, stocks and the mutual funds that own them, rather than bonds – may be able to help you keep pace.

Focus on what you can control

We believe the most important thing you can do as an investor is to not get carried away by emotions – good or bad. Don’t get distracted by the latest headlines. The world always has its share of problems, and there are always reasons not to invest. Too often, investment decisions are rushed by emotion, but it's important to avoid making rushed, reactive decisions where your money is concerned.

When the outlook is filled with uncertainty, our advice is to focus on the things you can control:

  • Quality of the investments you own
  • Diversification of your portfolio
  • Holding period for your investments

Review your strategy regularly

How often should you review your strategy? Once a year is usually about right, unless there’s been a change in your situation or goals. If you’re doing it every time the market makes a short-term move, you’ll likely be making too many changes to your strategy based on emotions. Wait longer than a year, and simple problems can compound.

However, if your financial situation or goals change, talk with your Edward Jones 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 advisor for a complete review.

How we can help

If your financial situation or goals change, talk with your Edward Jones 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 advisor for a complete review.

Important Information:

1 Investment-grade bonds are those rated BBB/Baa and above by Standard & Poor’s and Moody’s. A bond represents a loan that an investor makes to an issuer in which the issuer agrees to pay the owner the amount of the face value of the bond at a future date, and to pay interest at a specified rate at regular intervals. Bonds are subject to yield and market value fluctuation. If a bond is sold prior to maturity, the amount received from the sale may be less than the amount originally invested. Bond values may decline in a rising interest rate environment.
2 Diversification does not guarantee a profit or protect against loss.
Past performance is not a guarantee of future results.
Dividends can be increased, decreased or eliminated at any point without notice.
Investors should understand the risks involved of owning investments, including interest rate risk, credit risk and market risk.  The value of investments fluctuates and investors can lose some or all of their principal.
• Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.  Please read the prospectus before investing.  Mutual Funds are not guaranteed, their values change frequently, and past performance may not be repeated.

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.

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