Investing Like a Smart Shopper

You’re a pro at getting the most for your money. You know the difference between quality and junk, and you scour the shelves for great products. As financial coaches to our clients, we strive to help them follow similar principals when selecting investments. Here are a few investment strategies that we employ to help our clients become ‘smarter shoppers’.

BUY THINGS WHEN THEY’RE ON SALE:  You waited until Black Friday for that great price on your big screen television, but did you exercise the same patience when you acquired your last investment? You don’t need to be able to time the market to sit and wait for a bargain price. Just as coats are cheaper in June, stocks go through cycles based on economic conditions as well as fads and crazes. By purchasing what’s temporarily out of style, we aim to make every invested dollar go further.

DETERMINE VALUE:  You wouldn’t buy a $300 couch just because it’s cheap; you’d examine the cushions, the frame, and the fabric to conclude whether it would last. It’s wise to treat investments the same way. A bargain price on a share of equity with a popular company could be good, but it could also be very bad. Be careful not to fall for “hot stock tips” from emails, websites, or friends. Just because something is on sale, doesn’t always mean it’s a good value.

SPEND MORE FOR GOOD QUALITY:  It’s worth paying more to get quality on your refrigerator, your car, and anything else you really need. By the same token, investments with excellent ratings and solid performance records are often worth a higher price. Make sure you portfolio includes a core of high-quality investments.

DO THE RESEARCH:  Even when there isn’t a lot of money at stake, smart shoppers kick the proverbial tires. They read reviews before making important purchases. In a similar way, investors are wise to research their investments thoroughly. We make it a practice to check consumer and industry publications to find top-rated products and services for our clients. We believe that a smart investor is an educated investor, and we encourage our clients to always make sure they know what they’re buying.

DO THE MAINTENANCE:  You take care of your possessions. When your car needs an oil change or a tire rotation, you make sure you have it done. Investment portfolios need maintenance too. At the very least, an investment portfolio should be reviewed once each year, but in many cases, more frequently is needed. We monitor our client’s accounts on a regular basis to ensure they are still performing in a way that meets their intention. When we discover that a client’s circumstances have changed, or that shifting global markets require a different investing approach, we are quick to make adjustments.

DO REGULAR HOUSECLEANING:  When that microwave stops working, you throw it out. When your suit no longer suits you, you give it to charity. Your portfolio needs cleaning too. From time to time, sweep out the investments that aren’t helping you reach your goals.  

If you’re already a smart shopper, you have many skills that are needed to invest well. By applying these principles to your portfolio, you may increase your chances of experiencing investment success.

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