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Five Essential Concepts That Can Make You a Savvy Investor

| December 20, 2018
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Is there anyone who doesn’t think it’s important to save for retirement? As an independent financial advisor in DC, I talk to people from all walks of life, and one thing they have in common is their desire for a secure retirement. How they define security varies, but the path to achievement requires everyone to become an investor. Some are more comfortable than others in doing so.

To many, investing is a foreign language, requiring multiple levels of translation. Fortunately, there are many resources available to help make investment decisions -  from personal financial advisors to detailed descriptions and reports. In this blog, I am sharing a comprehensive report from FINRA, the Financial Industry Regulatory Authority. Read below for a detailed explanation of five essential investment concepts for those who want to learn more.

1. Evaluating Investment Performance

Choosing investments is just the beginning of your work as an investor. As time goes by, you'll need to monitor the performance of these investments to see how they are working together in your portfolio to help you progress toward your goals. Understanding how to figure the rate of return and yield are key to evaluating the performance of an investment or portfolio. Read More.

2. Diversifying Your Portfolio

Diversification helps protect the value of your portfolio if one or more of your investments perform poorly. Learn how to apply this key concept to your portfolio. Read More.

3. The Reality of Investment Risk

When it comes to risk, here's a reality check: All investments carry some degree of risk. Stocks, bonds, mutual funds, and exchange-traded funds can lose value, even all their value, if market conditions sour. Even conservative, insured investments, such as certificates of deposit (CDs) issued by a bank or credit union come with inflation risk. Read More.

4. Asset Allocation

With a mix of asset classes in your portfolio (such as stocks, bonds, real estate, and cash), you increase the probability that some of your investments will provide satisfactory returns even if others are flat or losing value. Learn the basics of allocating portions of your total portfolio to different asset classes. Read More.

5. Rebalancing Your Portfolio

As market performance alters the values of your asset classes, you may find that your asset allocation no longer provides the balance of growth and return that you want. In that case, you may want to consider adjusting your holdings and rebalancing your portfolio. Read More.

You don’t have to do this on your own. Phillips Financial Strategies on Capitol Hill is based on the principle that education and understanding are critical to making wise and informed decisions as an investor. If you have any questions or concerns about these or any other investing concepts or wish to schedule an appointment, please contact us. 

Source: Key Investing Concepts, FINRA 

Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.

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