When you invest in a well-diversified global portfolio of stocks, bonds, and commodities, your wealth is set up to grow over time. Don’t be swayed from a smart investing strategy by short-term market fluctuations. Resist the temptation to give in to emotions, and stick to your plan. Successful long-term investing requires patience, discipline, and the ability to ignore market noise.
Remember: selling low, when the market drops, and buying high, when it goes up again, is the exact opposite of what creates long-term wealth. This all-too-common mistake often happens when investors follow their emotions instead of a logical investing strategy.
Unfortunately, the way financial information is reported in the media often intensifies this emotional mindset. This in turn fuels the reactive, short-term thinking that harms rather than helps investors. It may seem as if staying glued to the financial news is a good idea, but actually, it’s much better to tune out market noise. By the time financial news hits the headlines, the market has already incorporated new information, which means that the best thing to do is stick to your financial plan, walk away from the news, and regain your peace of mind.
It is important to take a proactive approach to your financial health, and that includes being aware of all the moving pieces of your wealth. However, the right time to re-evaluate your financial plan, and adjust as needed, is at least once a year or whenever a major life change occurs. Your investing strategy should be customized to your personal situation, including your long-term goals, financial needs, and risk tolerance. Unless one of these major factors changes, the prudent approach is to stick to a smart strategy that makes sense for you.