3 Key Strategies to Being a Successful Investor
Key Summary: When asked about their investment performance and returns, many DIY investors believe they are doing just fine; however, when assessed over the long-term, many of these investors’ returns don’t even beat inflation. The average investor only earns around 2% annually. Between the numerous biases and assumptions many investors make and their impulsive investment decisions once every few years, many risks leak into an investor’s portfolio and hinder their returns over time.
One of the key strategies to remember when investing is to keep an eye on the long game. Understanding the market’s historical returns and maintaining a long-term perspective can help lessen the gut reactions to global events and market volatility. In addition, utilizing rebalancing strategies within a diversified portfolio can be a great way to minimize the risky decision-making that results from short-term fluctuations within the market.
There’s one underlying fundamental truth when it comes to most investors — they are reactive. Whether it’s a news headline or an individual security’s performance, investors tend to make one or two bad decisions with their investments every few years. What all of these decisions turn into is poor timing decisions and out-of-balance asset allocations within a portfolio. When we work with our clients, we ensure that they have a personalized plan in place that takes their risk tolerance, future cash flow expectations, and long-term goals into consideration and rebalance their accounts along the way to keep them on track.
At Willis Johnson and Associates, we have years of experience helping our clients take emotion out of the equation and positioning them for a successful retirement.
