Tips on ways you can work to be­come a bet­ter in­vestor

Calhoun Times - - BUSINESS NEWS - De­wayne Bowen

luck­ier I get.” And this same phi­los­o­phy can ap­ply to your in­vest­ing, too – be­cause you can in­deed work to be­come a bet­ter in­vestor.

Con­sider these steps:

-Work to un­der­stand your goals and risk t ol­er­ance. Self­knowl­edge is im­por­tant in all phases of life – and it’s cer­tainly es­sen­tial to you when you in­vest. For one thing, you need to know your goals. How long do you plan to work? What would you like to do when you re­tire? If you have chil­dren, do you ex­pect to help pay for their col­lege ed­u­ca­tions? You’ll also need to know your risk tol­er­ance to help de­ter­mine your in­vest­ment choices. In­vestors with a high tol­er­ance for risk typ­i­cally can over­look the dayto- day fluc­tu­a­tions in the fi­nan­cial mar­kets, and may be com­fort­able in­vest­ing more ag­gres­sively. But those with a low risk tol­er­ance may be more in­clined to fo­cus on in­vest­ments that of­fer greater preser­va­tion of prin­ci­pal, even if this means sac­ri­fic­ing some growth po­ten­tial.

-Work to learn all you can about your in­vest­ments. Here’s a bit of ad­vice that will al­ways be valid: Don’t in­vest in what you don’t un­der­stand. The more you know about your in­vest­ments and what you can ex­pect from them, the less likely that you will be sur­prised at their per­for­mance and their im­pact on your fi­nan­cial strat­egy. When you in­vest in stocks, you hope their value will ap­pre­ci­ate over time, but you shouldn’t be shocked over short­term price fluc­tu­a­tions. Con­versely, when you pur­chase a fixe­drate ve­hi­cle, such as a Cer­tifi­cate of De­posit (CD), you ex­pect reg­u­lar in­ter­est pay­ments and a re­turn of your prin­ci­pal when the CD ma­tures. But do not an­tic­i­pate much, if any, growth in the value of your in­vest­ment.

- Work to de­velop good in­vest­ment habits. De­vel­op­ing good habits of­ten pays off. For ex­am­ple, if you ex­er­cise reg­u­larly, don’t smoke and fol­low a sen­si­ble diet, you will likely help your long-term health. And you can fol­low good in­vest­ment habits, too, such as con­tribut­ing reg­u­larly to your 401(k) or other em­ploy­er­spon­sored re­tire­ment plan. You’ll also want to avoid bad habits, such as over­re­act­ing to a sharp drop in the fi­nan­cial mar­kets. In an ef­fort to cut your losses, you might re­spond to this down­turn by im­me­di­ately sell­ing in­vest­ments whose fun­da­men­tals are still strong and whose prospects still may be pos­i­tive.

- Work to get the as­sis­tance you need. In­vest­ing can be com­plex, so you may want to work with a fi­nan­cial pro­fes­sional. But in­vest­ing is just one part of your over­all fi­nan­cial pic­ture, so work­ing with an at­tor­ney can help with your es­tate plans. And a tax pro­fes­sional can ad­vise you on the taxre­lated con­se­quences of var­i­ous fi­nan­cial moves.

There aren’t many guar­an­tees in the in­vest­ment world – but the harder you work at be­com­ing a good in­vestor, the bet­ter your chances of reach­ing your ul­ti­mate ob­jec­tives.

This ar­ti­cle was writ­ten by Ed­ward Jones for use by your lo­cal Ed­ward Jones Fi­nan­cial Ad­vi­sor.

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