Do Not Set It And Forget It: Why Your Investments Need Maintenance
Investing For the Long Run Sounds Simple, But It Is Not
Investing for the long run sounds good, but it is not always easy.
When the market gets stressed, it can be hard to stick to your plan. Your accounts may be down, the headlines turn negative, and it can feel like the safest move is to do something, anything.
This is usually when we are most at risk of making a Big Mistake.
The Impact of Market Downturns
When the market drops, you may feel poorer, even if nothing has changed in your day-to-day life.
At the same time, the news often gets worse. You might hear about:
- Layoffs
- Recessions
- Bankruptcies
- High inflation
- Even wars and other global shocks
During tough times like these, you need something solid to hold onto. This is where an Investment Philosophy comes in. It gives you a clear way to think about your investments, before emotions show up.
A coach can help you understand this philosophy and apply it to your situation.
The Big Mistake: Trading At the Wrong Time
A financial advisor can help you avoid what I call the Big Mistake.
This usually looks like:
- Selling after a big drop because it feels too painful.
- Buying after a big run up because it feels safe again.
In other words, buying high and selling low. Exactly the opposite of what we want.
Our emotions can lead us to make these poor investment choices. A good advisor helps you step back, see the bigger picture, and stick with a plan that fits your goals.
If we build your portfolio with precision, you will experience its highs and lows. Your confidence may waver, but with good coaching, it can remain strong enough to stay on course.
Why Ongoing Management Matters
It is not enough to start with the right structure. Your portfolio needs maintenance over time.
For example, if you decide you want 60% in stocks and 40% in bonds but never rebalance, your portfolio can drift. After a long period when stocks do well, you might end up at 65%, 70%, or even 75% in stocks.
Everything looks fine until the next market drop.
When that drop comes, it can hit you harder than you expected because you are taking more risk than you planned. This is when the Big Mistake becomes more likely. You may feel tempted to sell at the worst possible time.
Ongoing investment management helps keep your portfolio aligned with your true risk level and your long-term plan. Rebalancing is not exciting, but it is powerful.
Why You Cannot Set It and Forget It
A set it and forget it approach sounds appealing, especially when you are busy with work and family. But in real life, your:
- Income changes.
- Company stock or RSUs vest.
- Goals shift as kids grow and life evolves.
- Markets move and your allocation drifts.
Your plan should not change every week, but it does need regular attention and thoughtful adjustments.
Your Investment Plan
What do you think?
- Do you have the right allocation in place for your goals and comfort level?
- Are you confident you can hold steady when the market looks bad?
- What would it be worth to have someone help you avoid the Big Mistake?