Six Keys to More Successful Investing
Through a partnership with Raymond James & Associates, Inc., Bank SNB customers have access to asset management and investment services. Wise financial investments are critical to growing your wealth. Follow these six tips for more successful investing from Raymond James Senior Vice President Rick Hadrava:
- Long-term compounding can help your nest egg grow. Compounding pays you earnings on your reinvested earnings. The longer you leave your money at work for you, the more exciting the numbers get. The compound earnings of deferred tax dollars are the main reason experts recommend fully funding all tax-advantage retirement accounts and plans available to you.
- Endure short-term pain for long-term gain. The financial marketplace can be volatile, but the longer you stay with a diversified portfolio of investments, the more likely you are to reduce your risk and improve your opportunities for gain. Though past performance doesn’t guarantee future results, the long-term direction of the stock market has historically been up.
- Spread your wealth through asset allocation. Some asset categories and individual investments historically have been less volatile than others. Bond price swings, for example, have generally been less dramatic than stock prices. The mix of asset classes you own is a large factor in determining your overall investment portfolio performance. In other words, the basic decision about how to divide your money between stocks, bonds and cash is probably more important than your subsequent decisions over exactly which companies to invest in. Also, by dividing your investment dollars among asset classes that do not respond to the same market forces in the same way at the same time, you can help minimize the effects of market volatility while maximizing your chances of return in the long term. Gains in one class can help offset the losses in another, minimizing their overall impact on your portfolio.
- Consider liquidity in your investment choices. If you’ll need the money within the next one to three years, you may want to consider certificates of deposit or a savings account, which are insured by the FDIC, or short-term bonds or a money market account, which are neither insured nor guaranteed by the FDIC or any other governmental agency. You’ll breathe easier knowing that the principal you invested is relatively safe and quickly available, without concern over market conditions on a given day.
- Dollar cost averaging: Investing consistently and often. Dollar cost averaging is a method of accumulating shares of stock or a mutual fund by purchasing a fixed dollar amount of these securities at regularly scheduled intervals over an extended time. When the price is high, your fixed dollar investment buys less; when prices are low, the same dollar investment will buy more shares. A regular, fixed-dollar investment should result in a lower average price per share than you would get buying a fixed number of shares at each investment interval. However, just as with any investment strategy, dollar cost averaging can’t guarantee you a profit or protect you against a loss if the market is declining.
- Buy and hold, don’t buy and forget. Your portfolio’s long-term success will depend on periodically reviewing it. Even if nothing bad happens, your various investments will likely appreciate at different rates, which will alter your asset allocation without any action on your part. Review your portfolio periodically to see if you need to return to your original allocation. Additionally, your asset allocation should reflect any changes to your circumstances. For example, as you get closer to retirement, you might decide to increase your allocation to less volatile investments or those that can provide a steady stream of income.
To get started, talk with a Bank SNB banker about your needs for asset management and investment services.
Not FDIC Insured • Not Bank Guaranteed • Not a Deposit
Not Insured By Any Federal Government Agency • May Lose Value
Opinions expressed are those of Rick Hadrava
Raymond James & Associates, Inc.
Member New York Stock Exchange/SIPC
1101 N. Broadway Ave., Ste. 200
Oklahoma City, OK 73103
These opinions are not necessarily those of Raymond James and are subject to change without notice. Information provided is general in nature, not a complete statement of all information necessary for making an investment decision, and is not a recommendation or a solicitation to buy or sell any security. Diversification and strategic asset allocation do not ensure a profit or protect against a loss. Investments are subject to market risk, including possible loss of principal. The process of rebalancing may carry tax consequences.