Cents and Sensibility
Cents and Sensibility
Patience, discipline keys
for investing long term
Question: How does one succeed as a long-term investor?Answer: To be a successful long-term investor, you need discipline. You need patience. And you need the ability to persevere in the face of adversity.
What actions can you take to develop these traits? Consider the following suggestions:
>> Always keep your goals in mind. Every time you make an investment decision -- no matter how seemingly insignificant -- think about why you're investing. You may even want to use some visual "cues." For example, if you want to retire early, print your projected year of retirement on a card -- and keep it on your desk. If you want a vacation home, cut out a picture of a house on a beach, and paste it on a folder containing your investment information. These types of things may sound simplistic, but they can serve as valuable reminders of what you want to accomplish.
>> Ignore distractions. Basically, once you've established your personalized investment strategy, everything else is a distraction. Headlines about corporate accounting scandals are a distraction. Steep, short-term market plunges are a distraction. Your neighbor's tip on a "hot" stock is a distraction. They're all distractions -- and there are hundreds of thousands more of them out there, too. If you can train yourself to ignore all these annoyances and focus exclusively on what you need to do to meet your goals, you will be putting yourself in the strongest possible position to get the results you want.
>> Chart your progress -- but not too often. It's essential that you know the headway you're making toward your objectives. But many people make the mistake of "checking their progress" too often. Unless you're constantly buying and selling -- which you wouldn't do if you were a true long-term investor -- there's really not much point in reviewing your portfolio every day, week, or month.
If you're always studying your investments' performance, you are unquestionably going to see things you don't like -- and you might be tempted to make unwise changes.
In other words, don't waste time studying reams of "snapshots." Instead, give the "big picture" time to develop.
However, you may want to meet with your investment professional for a portfolio review once a year, or whenever you face a major change in your life or your financial situation.
Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com