Long-term Vision

Attaining financial objectives takes a special kind of discipline. One of the keys to financial success is establishing a long-term plan and sticking with it regardless of how you may feel when the market goes up or down.

As we saw in The Investor’s Cycle of Emotions, financial market fluctuations can make us lose sight of our real goals.

Invest Based on Your Risk Tolerance

Establishing your investor profile will help you avoid certain pitfalls. In addition to putting your financial targets in writing, the investor profile defines the ground rules regarding your tolerance of financial market fluctuations. And if up markets have you ready to take on more risk - or conversely, down markets make you want to pull in your horns - it’s helpful to revisit your profile before you act.

Stay Focused on the Future

Your investment horizon is another component used to determine your investor profile. Are you investing mainly for retirement? Are you planning to draw on your investments in five, ten, or fifteen years? Keep your eye on that horizon, especially when the financial markets have a bad day.

Remind yourself that :

• While financial market volatility may sometimes rise over short periods, it subsides with time.
• Your portfolio’s long-term performance is what counts - not its daily, monthly, or even quarterly returns.