If there was one thing that I could wish for you this New Year’s, it would be that you change the way you invest.
Instead of following the herd, or believing that you can outsmart the market, I want you to adopt these investment resolutions:
- I will not confuse entertainment with advice. I will acknowledge that the financial media is in the entertainment business and their message can compromise my long-term focus and discipline, leading me to make poor investment decisions. If necessary, I will turn off CNBC and turn on the Food Network.
- I will stop searching for tomorrow’s star money manager, as there are no gurus. Capitalism will be my guru because, with capitalism, there is a positive expected return on capital, and it is there for the taking.
- I will not invest based on a forecast — whether it is mine or anyone else’s. I will recognize that the urge to form an opinion will never go away, but I won’t act on it because no one can repeatedly predict the future.
- I will keep a long-term perspective and appropriately consider my investment time horizon (i.e., how long my portfolio is to be invested) when determining my performance horizon (i.e., the time frame I use to evaluate results).
- I will not focus my portfolio in a few securities, or even a few asset classes, as diversification remains the closest thing to a free lunch.
- I will continue to invest new capital and work my plan because it is time in the market — and not timing the market — that matters.
- I will consider working with a fiduciary investment advisor who can help me overcome my human emotions, which are often an impediment to my long-term investment success.
Scott Johnson is the CEO of DecisionPoint Financial, LLC. He is a CERTIFIED FINANCIAL PLANNER™ and an Accredited Investment Fiduciary. He and his firm provide comprehensive financial planning and investment management services to individuals and institutions. Scott can be reached at (480) 553-6249, or scott@dpplanners.com. Visit decisionpointfinancial.com.
DecisionPoint Financial, LLC is a Registered Investment Advisor. All investments involve risk. Risks associated with investing in securities include increased volatility and loss of principal. Past performance is no guarantee of future results. The information herein is educational in nature and does not represent investment advice. All rights reserved. DecisionPoint Financial, LLC © 2021.