In today’s fast-paced information age, we are bombarded 24 hours a day with investment advice – online, via television and radio, in the business press, and even from friends and family. You might be inundated with comments about how you should buy a certain type of stock because it’s positioned for significant growth. Or maybe there are voices claiming a market will soon face a downturn. With so many opinions floating around, you may be wondering who to listen to, and even the most level-headed investor can feel anxious. What is a long-term investor to do?
Tune out the noise
First, it’s helpful to anchor your thoughts on the basic principles of sound investing. Invest regularly in a well-diversified portfolio that reflects your goals, time horizon and risk tolerance and stick with it.
Second, understand why these basic principles aren’t common news items. The answer is simple: it’s the thrilling stories and dire predictions that grab attention and dominate the headlines.
This is not to suggest that you should ignore all market news or advice. Just be aware that, typically, more information in the news media is directed toward active investors and day traders than to traditional investors. Short-term advice may suit aggressive investors, but it’s rarely helpful for long-term investors following a customized investment plan.
Focus on the long term
Think for a moment of your investment portfolio as another of your key investments — your house. Do you check the value of your house every day, week or month? Probably not, but that doesn’t make you anxious about your real estate investment. You know that your house is likely to increase in value over time.
If a piece of news makes you think you should change your portfolio or take advantage of a specific opportunity, talk to your advisor first. They will help you separate the news from the noise and make sure your portfolio is aligned with your investment objectives.