7 Rules Of Investing

By Jeff Gilbert

When it comes to finances, words like “saving” and “budgeting” can seem fairly self-explanatory. But how about the word “investing”? Now that sounds a bit more complicated. What does it take to succeed in investing? A set formula? A special skill and talent? Rather than being intimidated and overwhelmed, crossing your fingers, and hoping for the best, let’s conduct a quick crash course on the topic. The more you know, the more confident you’ll be.

Whether you choose to purchase stocks and bonds, contribute to a retirement account such as a 401(k), or even invest in real estate, there are time-tested principles to investing wisely, and following these 7 rules of investing will help put you on a path toward reaching your goals (hopefully without headaches).

1. Manage Your Emotions

Behavior is a major factor in investment success. By being aware of your emotions and knowing your behavioral pitfalls, you can avoid many potential investment mistakes caused by panic. Finances are an integral part of our lives and it’s difficult to separate them from our emotions, but your nest egg will thank you if you can learn to take your time when making decisions and stay strong and committed when the market feels like a roller coaster.

2. Stay Away From Predictions

Wouldn’t it be wonderful to have a crystal ball to predict where the markets will go or what the economy will do? Unfortunately, it’s not that simple. Don’t worry about what you can’t control, but channel that energy into focusing on the factors you can impact, such as the types of companies or funds you invest in and how much you save. On that same token, don’t make your investment decisions only based on past performance. Just because a mutual fund blew everyone away last year doesn’t mean it will thrive this year. 

3. Invest For The Long Term

You may want to check financial tasks off your to-do list in a hurry, but remember, investing isn’t a race. It may take time for you to reach your goals, and if you go in with that mindset, you may see more growth and can celebrate the small victories along the way. 

4. Control What You Can

It’ll be easier to stay committed to your long-term plan if you control what you can and let go of the rest. That’s why it’s important to clarify your goals, needs, and time horizon and design a plan tailored to your unique situation. Having an investment philosophy and strategy will give you purpose when hard times come. Your reason for investing could be to save for retirement, put aside money for college tuition, or save for a down payment on a home. Knowing your purpose makes the journey more meaningful. 

5. Avoid Unnecessary Risk

All investing involves risk, but that is neither a reason to avoid investing nor a reason to throw all caution to the wind. The level of risk you take should correspond to your age, time horizon, and goals. Your portfolio isn’t the place for speculation or bets, and your plan should reflect your risk tolerance. 

6. Start Now

Since investing is a marathon, time is on your side. The longer you allow your money to sit in an investment account, the more time you’ll have to reap the benefits of compound interest. Don’t save investing for the future when you feel more prepared. Each year you wait means you’ll need to save more in a shorter amount of time.

7. Diversify Your Investments

It’s drilled into us pretty regularly that we need to diversify our portfolios. Since investing is never a guarantee, you may want to consider investing in various formats and companies to help reduce your risk of loss. That way, if a company goes down or an industry tanks, you don’t lose all your money at once. 

Rules To Live (Or Invest) By

See? Don’t you already feel less intimidated now that we’ve covered some investment basics to steer you in the right direction? Investing doesn’t have to be complicated or scary, and you don’t need to learn all the ins and outs on your own. As you pursue your financial future, we at Balboa Wealth Partners would love to help you pursue a positive investment experience and implement these tips into your investment strategy. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com to start taking control of your money and stay informed about your investments.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

How To Prepare For Volatility In The Market

By Jeff Gilbert

Here’s the thing: Even though we had been enjoying our record-long bull market and knew that it couldn’t last forever, no one saw our current situation coming. For example, when we turned the page of our calendar to 2020, analysts predicted modest returns (1) and the financial world saw little risk of a recession. 

But just because we didn’t see this coming doesn’t mean you are powerless. While the severity of our current events is not to be minimized, we can battle fear and anxiety by going beyond the headlines and educating ourselves with the facts. With that in mind, here are 4 ways to prepare your finances for more volatility. 

1. Keep A Level Head

Times of uncertainty are not ideal for making drastic changes or decisions. In today’s digital world, we have 24/7 access to news media outlets, and there are a lot of them. With so many different voices fighting for our attention, headlines are getting more and more alarmist. We are constantly bombarded with articles and videos telling us what we need to do based on the last hour’s market performance. 

That’s why one of the worst things you can do in a volatile market is let your emotions drive your actions. Volatile times call for a logical outlook. Remember: The numbers you see in your account are just that—numbers. They don’t mean anything unless you sell. Don’t let fear get the best of you. This brings me to my second point.

2. Consider Long-Term Results

Instead, stick to your long-term perspective. The market might be down tomorrow and it might be down a month from now. But if you needed your money tomorrow or a month from now, you wouldn’t have invested it in the stock market. Stock market investing is for the long term, so you shouldn’t let short-term volatility scare you. Volatility and market drops will only hurt you if you panic sell when the market is down and lock in those losses. 

History shows us that about every four years the markets post negative annual returns. In spite of that, the S&P 500 Index has averaged gains of 12% from 1979 to 2019. (2) Here is a graph that shows this long-term stability, despite short-term market fluctuations. This is the Dow Jones Industrial Average (DJIA) showing over the last 30 years of investment value, which is a fair representation of the market as a whole if you are an average investor. 

If you remember the 2008/2009 crash, as seen above, the market recovered well. The market always recovers, and it will continue to do so. 

3. Trust Your Portfolio

Markets go up and down, and investment professionals understand the movements and prepare for them. If you’re a client of ours, then we designed your portfolio with this in mind. We knew it would happen and you are ready for it. 

Just because the Dow Jones Industrial Average is bouncing all over the place doesn’t mean that your portfolio is. Your portfolio consists of not just stocks but also bonds and other assets as well. They are designed to work together and balance each other out so that you won’t experience the wild ride that other investors experience. We custom-design every portfolio with your specific time horizon and investment goals in mind, so you have the opportunity to achieve your goals regardless of what the markets do today or tomorrow.

4. Talk To A Professional About Risk

This is not the time to go it alone. It’s extremely beneficial to talk with someone who has been through these situations before and can help answer concerns specific to your needs and phase of life.

Depending on your age and financial circumstances, you might not feel like you have as much time to let the market bounce back. This is why it is even more crucial to make sure the types of investments you have align with your risk tolerance and time horizon. Are you ready to see all your options for protecting your money and build a foundation that can lead to success in any market? We at Balboa Wealth Partners are here for you. Give me a call at 949-445-1465 or email me at jgilbert@balboawealth.com to schedule an appointment.

About Jeff

Jeff Gilbert is the founder and CEO of Balboa Wealth Partners, a holistic financial management firm dedicated to providing clients guidance today for tomorrow’s success. With nearly three decades of industry experience, he has worked as both an advisor and executive-level manager, partnering with and serving a diverse range of clients. Specializing in serving high- and ultra-high-net-worth families, Jeff aims to help clients achieve their short-term and long-term goals, worry less about their finances, and focus more on their life’s passions. Based in Orange County, Jeff works with clients throughout Southern California as well as Arizona, Oregon, and Washington. To learn more, connect with Jeff on LinkedIn or email jgilbert@balboawealth.com

Advisory services provided by Balboa Wealth Partners, Inc., an Investment Advisor registered with the SEC. Advisory services are only offered to clients or prospective clients where Balboa Wealth Partners and its Investment Advisor Representatives are properly licensed or exempt from registration.

Securities offered through Chalice Capital Partners, LLC, member FINRA, SIPC.

Balboa offers advisory services independent of Chalice. Neither firm is affiliated.

____________

(1) https://www.nytimes.com/2020/01/01/business/wall-street-markets-2020.html

(2) http://www.moneychimp.com/features/market_cagr.htm

(3) https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart