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Emotional Investment Decisions in Volatile Markets Can Be a Mistake

I have found that many people buy their investments differently than they buy everything else. Which is often the wrong thing to do.

Example: When you buy a car, a house, clothes and just about everything else, don’t you want to pay the lowest price? Why is it then when the market is down, instead of buying when investments may “be on sale”, many people want to out? The old saying is “buy low and sell high”. Not “pay more and sell when it’s down”.

Consider the following:

  • Money that you will need within the next five years, place in secure investments where your principal will not fluctuate and the money is available when you need it, without penalty.
  • Money that will not be needed for more than five years, allocate to a diversified portfolio that is in line with your risk comfort level, time frame and other important factors.

With the above strategy in place, you can have greater peace of mind during times of volatile markets.

Important: As always, before making any changes, discuss all fees, tax implications, risk and appropriateness with your tax and investment advisor.

Nancy Butler, August 2011 ©