FINANCIAL FOCUS
KRISTI TREVINO Financial Advisor Edward Jones
Don ’ t let INVESTMENTS GO ON VACATION
Now that we ’ ve gained at least some space from the COVID-19 pandemic , summer travel is heating up . But while you might be eager to hit the road , you won ’ t want your investments to take a vacation – you need them to work hard for you consistently . But how can you make this happen ? Here are some ideas :
• Know your destination . “ If you don ’ t know where you want to go , then it doesn ’ t matter which path you take .” This bit of wisdom , paraphrased from the classic children ’ s book , Alice ’ s Adventures in Wonderland , may be appropriate for , say , hikers exploring a new landscape . But as an investor , it matters a great deal which path you take . If you only dabble in investing , occasionally putting some money into one investment or another , it will be difficult to build a portfolio that ’ s consistently working in your best interest . It ’ s important to create a long-term investment strategy based on where you want to go in life – that is , how long you plan to work , what sort of retirement lifestyle you envision , and so on .
• Match goals with investments . Some investments are designed to achieve certain goals . To illustrate : When you contribute to an IRA and a 401 ( k ) or similar employer-sponsored plan , you ’ re investing for one specific , long-term goal : a comfortable retirement . While you can tap into these accounts for other purposes – though doing so might incur immediate taxes and penalties – they are designed to provide you with income during your retirement years . Similarly , you may have other investments for other purposes , such as a 529 education savings plan . Here ’ s the key point : Goals-based investing , by its nature , can help ensure your portfolio is always working on your
behalf , in the way you intended .
• Invest for growth . Ideally , hard work produces results , and one of the main results you want from your investments is growth – that is , you want your investments to appreciate in value so they can eventually help you meet your goals . But if you are overconcentrated in vehicles such as certificates of deposit ( CDs ) and government securities , you may end up lowering your growth potential . That ’ s not to say that CDs and Treasury bills are in some sense “ lazy .” They can provide you with income and help you reduce the impact of market volatility on your portfolio . But to achieve most of your goals , you ’ ll need a reasonable number of growthoriented investments working for you , with the exact percentage based on your needs and life stages .
• Check your progress . How else can you ensure your investments aren ’ t just taking it easy ? By checking up on them . If you follow a buy-and-hold strategy , your portfolio shouldn ’ t require many changes if it already reflects your goals , risk tolerance and time horizon . Too much buying and selling could jeopardize your ability to follow a consistent , long-term strategy . However , “ buy and hold ” doesn ’ t mean “ buy and forget .” By reviewing your portfolio at least once a year , you can determine if your investments are performing as they should . If they ’ re not working for you as you ’ d like , you may need to make some changes . If you ’ re traveling this summer , relax and enjoy yourself – but keep those investments working hard .
This article was written by Edward Jones for use by your local Edward Jones Financial
Advisor . Edward Jones , Member SIPC
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