Keep investments from going on ‘vacation’


It’s that time of year when many of us hit the road for a summer vacation. If you are fortunate, you will be joining them. After all, “all work and no play” is a difficult way to live. But while you may not think it beneficial to work all the time, the same can’t be said of your investments and your investment strategy, because ideally they should never stop laboring on your behalf.

How can you avoid “taking a vacation” as an investor? Here are a few ideas:

• Don’t let your portfolio get “lazy.” Laziness is fine for vacations, but it’s not so great for an investment portfolio. When you invest, it can be easy to let things drift along and stay the same as they’ve always been. But over time, things can change: Your goals can change somewhat, your family situation can certainly change and even your investments themselves may change. That’s why it’s important to review your portfolio and your investment choices regularly, possibly with the help of a financial professional. You may not need to make drastic changes, but even modest-seeming adjustments may make a big difference down the road.

• Don’t choose an investment mix that just “sits around.” If you were to put all your investment dollars in conservative vehicles, such as certificates of deposit (CDs), your principal would likely not experience much volatility — which is good. But your money almost certainly would not have the growth potential to help you reach your long-term goals — which is not so good. That’s why you will need to own some investments, such as stocks and stock-based instruments, that offer growth potential. It’s true these investments will fluctuate in value, and there’s no guarantee you won’t lose money on them. You can help address this risk by focusing on the long term and by creating an investment mix that is suitable for your situation.

• Don’t become a “spend-happy” investor. It can be pretty easy to spend more on vacations than you had planned. For some reason, perhaps the carefree nature of a vacation, the act of spending money seems less grounded in reality — until you get home and see the bills. As an investor, you can also get carried away with your transactions — and it can cost you. To be specific, if you are constantly buying and selling investments, you’ll be making it harder for yourself to follow a unified, long-term investment strategy. As mentioned, you will need to make changes as needed, over time, to your portfolio, but making moves such as chasing after “hot” investments, or giving up on other investments after one bad period, will likely not benefit you and could prove detrimental to your progress.

As someone who spends most of your life working, you may very much appreciate your vacations. But as someone trying to achieve important financial goals, such as a comfortable retirement, you shouldn’t take a “vacation” from investing — and you shouldn’t let your investments take one, either. As you know from your career and your other activities, making a consistent effort may pay off — and it’s the same with investing.

This article was written by Edward Jones for use by your local Edward Jones financial advisor.

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