Investing over the long term can, of course, help ensure the most gain. However, people have to understand a few truths about it. Jameson Van Houten offers these tips to help people get the most out of their investments.
Avoid the “noise.” The 24-hour news cycle has created a need for drama on every news channel in order to keep people’s attention. When assessing the global market seven days a week, they can turn what might have once been small blip on the radar and make it into a disaster piece. Jameson Van Houten says people should keep focused while riding through the turbulence caused by the breaking news alerts. Wait for selloffs, corrections and bear markets to pass.
Liquidity is important. As people approach retirement age, being able to quickly access their money becomes more and more important. Medical emergencies, unforeseen home repairs and more could require them to have to dip into their retirement investment accounts. Illiquid investments may cause a problem in these times of need, says Jameson Van Houten; penalties and other fees could take a big chunk out of a person’s investment if they draw money from these “locked up” accounts.
Know when to rebalance a portfolio. Novice investors may not understand that rebalancing their portfolio from time to time is important depending on market activities. Holding onto certain types of investments at the wrong time can be detrimental to one’s financial situation.
Do not get attached to certain types of investments. Success in one area can cause an investor to become biased against diversification. In the same regard, an investor could also become biased to one type of investment based on familiarity – it’s just what they’ve always done. Unfortunately, says Jameson Van Houten, this makes a person’s entire portfolio more heavily influenced by only a few investments.
Patience is the key. Investing can be a scary venture at first, with markets fluctuating and businesses rising and falling. Over time, investors should realize that the market rebounds from downturns, and that their long-term goals of financial security are better served by taking a deep breath and riding the wave.
Jameson Van Houten says he believes if people consider these truths when investing for the long term, they may find it easier to hold on through inevitable market fluctuations.