There are a million ideas about investing out there: on cable TV business shows with loud buzzers and louder hosts, in costly investment newsletters promising get-rich, can’t miss tips, at the barbecue where day-trading neighbors share the “secrets” of their “success.” There’s so much noise about how to score big in the stock market, but not a whole lot of clarity. Most of us have better things to do than spending all day watching the swings of the markets, hoping to get rich quickly. Instead, smart people invest for the long-term, and know that it’s a marathon, not a sprint.

I can help you do that.

Even though investing can seem overwhelmingly complex, I like to keep things as simple as possible. Investing is something you do to support your life—it shouldn’t be your life. And it’s something you do for the long haul, a steady climb where you make ongoing investments based around a smart plan, so you have resources when you need them for your whole life—and even beyond, if you’d like to leave a legacy for your kids or your favorite causes.

My approach is straightforward, standards-based, and built around a solid and understandable investment philosophy. Let’s take a look at what that means:

You need an investment plan to fit your needs and risk tolerance. Not everyone has the nerve—or the spare resources!—for high-risk investments. For most people, a smart, diversified portfolio where you automate your investments is the best bet for a life where you have the resources you need to enjoy life and pursue your passions.

Markets deliver returns over the long haul—so it’s essential to invest early and stay invested: I believe in markets. Even through the highs and lows of history, they’ve returned a profit over the long-term. To let the markets work for you, you have to be invested. Obvious, I know. But this is an important point because fear of the markets—the unknown—keeps many would-be investors on the sidelines, to their detriment. Leaving your money in cash (or under your mattress) may feel safe in the short run, but the truth is that you’ll lose purchasing power in the long run due to inflation.

Stay the course, even when the markets move in the wrong direction: The key is not being too reactive to bad news or downturns. Remember the crash of 2008, when the global economy melted down? I resisted the urge to focus too much on my 401K statements for a few years, just so I didn’t get tempted to bail on those ever-shrinking investments. And I continued to invest. My contributions were made on autopilot (automation is your friend!)—and everything invested in those years was bought at a steep discount, since the market was down. Now my account balances have roared back with the longest bull market in history—and I’ve benefited from staying invested. Think of downturns as an opportunity to buy on sale and don’t get tempted to bail when the market’s down.

Don’t try to time the market: The market is an effective information-processing machine. Each day, the world equity markets process billions of dollars in trades between buyers and sellers—and the real-time information they bring helps set prices. But the market’s pricing power works against active investment managers who try to outperform through stock picking or market timing. In fact, only 14% of US equity mutual funds and 13% of fixed income funds have survived and outperformed their benchmarks over the past 15 years. The reality is, nobody can predict which market segments will outperform from year to year. By holding a globally diversified portfolio, investors are well positioned to seek returns wherever they occur. If the seasoned pros can’t reliably outperform the market, the average investor probably can’t either.

Diversify across markets and the globe: Holding securities across many market segments can help manage overall risk. But diversifying within your home market may not be enough. Global diversification can broaden your investment universe. I believe in broad market investments that keep you diversified across industries, investment types, and global regions. That way, when one market is down, you’re still up in another.

Don’t assume past performance guarantees future returns: Some investors select mutual funds based on their past returns. But past performance offers little insight into a fund’s future returns. For example, most funds in the top quartile (25%) of previous three-year returns did not maintain a top-quartile ranking in the following three years. Past performance is never a guarantee of future success.

Consider the drivers of returns: Academic research has identified different dimensions, which can boost expected returns. I’ll help you structure your portfolio around these dimensions, such as markets (stocks over bonds), company size (small cap over large cap), relative prices (value over growth), and company profitability (high over low).

Focus on what you can control: You can’t control market swings and you can’t control how the latest political scandal will impact the markets. So what can you control? You can control how much you save and how much you spend. You can control what actions you take to live a meaningful and purposeful life. When it comes to your long-term investment strategy, I can help you:

  • Manage your emotions: Many people struggle to separate their emotions from investing. But the reality is that markets go up and down. Reacting to current market conditions can lead to making poor investment decisions. We’ll look at this more in my next post.
  • Look beyond the headlines: Paying attention to daily market news and commentary can challenge your investment discipline. Some messages stir anxiety about the future, while others tempt you to chase the latest investment fad. When headlines unsettle you, consider the source and maintain a long-term perspective. Or better yet, tune out the headlines altogether.

Want help with your investments and long-term financial goals? Let’s connect.

After a successful career in high-tech, Sheila McGinn, CFP® followed her passion and became a fee-only Financial Planner, where she helps clients navigate complex financial decisions and reach their financial goals.

Disclaimer: This content is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. For advice specific to your situation, consult a financial planner, accountant, and/or legal counsel. Reproduction of this material is prohibited without written permission from Brightview Financial Solutions, LLC, and all rights are reserved.