There will be many times where you’re tempted to make changes to your investment portfolios when the market dips or you want to take advantage of the opportunities the market is presenting you. However, please be aware that timing the market is nearly impossible, even for the most experienced investors. The reality is, downturns happen but your money is safer if you ride out the storm.
When your colleague is bragging about the stock he just bought, you may be tempted to buy it, too. Before you get caught in the fear of missing out syndrome, please be aware that it should be about achieving ‘your’ goals.
For instance, when you get into a car, the first question isn’t, “How fast am I willing to drive?” That depends on your destination (Investment Strategy), how long you have to get there (Time Horizon) and consequently, your risk tolerance. Instead of jumping in blind, you should start by building a strong understanding of your investment options.
If you still have plenty of time left before retirement, your investments should lean heavily toward stocks and less toward more conservative investments such as Treasury Bills or bonds. Investing in the stock market comes with inherent risks which makes them more susceptible to market swings, so it is important to educate yourself on these risks and the potential opportunities that stocks can create - higher rates of return than “safer” investments.
You are allowed to change strategies as your life changes, not just because of market expectations, but it is important to re-iterate that you should build the right portfolio of investments and appropriate asset allocation based on your financial status and investment appetite. We cannot allow ourselves to speculate about what might be, we should only focus on measurable data that can help us move from being passive investors to active investors.
As you grow older, you can make adjustments to your asset allocation and weigh your portfolio more toward conservative investments like Treasury Bills or Bonds than Stocks. Play it too safe, and it will be much harder to reach your savings goals.
So you don’t end up buying high and selling low( the opposite of what you should do anyway), you need to learn to tune out the noise and keep doing what you set out to do. Stick to your contributions. Stick to your investment choices. It may not be easy, but its what helps you stay sane through the ups and downs.
In general, it’s best to stay the course.
Invest Wisely!
