Do You Have Rules For Investing?

This week the market moved higher from last week’s pullback. With this weekly volatility back and forth, higher and lower, it’s important to establish your set of rules when investing. Looking ahead there are many outcomes that can affect your investments. A couple of examples are global trade tension, and next year’s U.S. presidential election.

Here are some examples you can implement so your emotions don’t swing in step with the market volatility:

Value vs. Growth

It’s tempting to invest in high growth stocks so your portfolio can grow quickly as the market moves higher. The danger in only holding stocks and investments like this is that when the market drops you also experience the large drops. It’s important to also hold investments that provide you with value such as a slow, steady growth and dividend. These two types of investments can provide you with different types of growth and diversification too.

Factors to consider for buying an investment

-Positive profit and earnings growth

-An appropriate price to earnings ratio

-Analyst ratings

-Expense Ratio and Total Cost

There are so many factors you can review when choosing investments. The list above is just a few that you may use to decide which investments are worth buying. We believe it’s important to have a list of rules that you follow so you aren’t chasing high flying stocks that are outperforming at the moment.

Overall Portfolio Allocation

Most important is to keep a portfolio that is allocated overall to various asset classes. Pay attention to the overall percentage you have invested in U.S. stocks, international, bonds, cash, among others. By keeping percentages appropriate for your portfolio you stay diversified and don’t let your emotions run your investments.

Set some rules for investing so your emotions and portfolio can stay balanced through volatile markets.

Wondering how this affects your investments? Schedule a call with Michelle and Steve to discuss your portfolio today.