If you’ve ever gone river rafting, there’s one lesson you learn almost immediately: It’s tough to paddle upstream. Go with the flow and you’ll find it much easier to steer around obstacles and reach your destination. Plus, you get to enjoy more scenery along the way. There’s no shortage of t-shirts and motivational speakers telling us to go against the flow, but the laws of nature are hard to ignore.
Your investment journey is best made by observing the laws of financial nature. No doubt about it – markets are strong and wild forces.
A wise strategy is to accept what you cannot change and manage what you can. You can’t control the direction the market flows. Try paddling upstream in the market and you’ll not only have to work extremely hard, but your efforts are likely to get you nowhere fast.
Like river rafting, you should take the following steps when working with the markets:
Chart a Course
Before beginning your journey, make a plan. When it comes to the markets, develop your plan by asking yourself these three questions: Where do you want to go? How far away is it? How long do you want the journey to take?
The answers to these questions will be part of your investment policy statement, which will serve as your own personalized map.
Choose Your “Difficulty”
Before entering the river, you choose your difficulty based on your level of expertise, river ratings and your age. Maybe you prefer smoother, clearer waters. Maybe you’re the adventurous type, hoping for a surge of foaming white rapids.
In a financial portfolio, the “difficulty” is the amount of risk you’re willing to take. With any financial portfolio, you will take on some risk. The trick is to ensure that your exposure to market risk and expected rewards is best aligned with your personal investment goals.
Risk isn’t the only factor involved. It’s important to weigh costs. By strictly managing for unnecessary expenses such as excess trading costs or burdensome taxable transactions, you can maximize your net returns – the kind that remain in your pocket.
As with costs, some actions make a big difference toward achieving your financial goals and some have no effect at best and become a costly drag on returns at worst. Identify the difference between each and act accordingly.
- Hire an Experienced Guide (Especially if You’re New to the Markets)
When it comes to river rafting, the most important aspect is safety. That’s why, if you’re new to the activity, you’re going to be paired with a guide.
You may be fairly new to the markets. “Safety” is probably one of the words that comes to mind when you think about how you would like to invest your money.That’s why you should choose a financial advisor to work as a guide for you.
A financial advisor can help you plan and chart out a map for staying the course. A financial advisor will remain by your side through the entire journey, making adjustments as needed. The financial advisor, like the guide who has experience with the river, has worked with markets every day and has the background and research to strategize effectively.
But a river rafting guide isn’t the only one paddling. In the same way, a financial advisor won’t just tell you what to do. A financial advisor will help you understand why you’re doing it so you can proceed with confidence.
Don’t paddle upstream with your investments. Chart a course, determine your risk, work with an advisor, and embark on a meaningful financial journey today.
Financial advisors at McLean are ready to guide you through the choppy market waters. Contact McLean today.
McLean Asset Management Corporation (MAMC) is a SEC registered investment adviser. The content of this publication reflects the views of McLean Asset Management Corporation (MAMC) and sources deemed by MAMC to be reliable. There are many different interpretations of investment statistics and many different ideas about how to best use them. Past performance is not indicative of future performance. The information provided is for educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy or sell securities. There are no warranties, expressed or implied, as to accuracy, completeness, or results obtained from any information on this presentation. Indexes are not available for direct investment. All investments involve risk.
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