March 2024

Here are three important principles you may want to include in your investment philosophy.

Regardless of how the markets may perform, it’s important to stick to an investment strategy that aligns with your goals and aims to help you potentially benefit from favorable market conditions while also seeking to mitigate risks during less favorable periods, including the possibility of loss. That’s why we encourage you to consider making the following three principles part of your investment philosophy:

Diversification.

The saying “don’t put all your eggs in one basket” has some application to investing. Over time, certain asset classes may perform better than others. If your assets are mostly held in one kind of investment, you could find yourself under a bit of pressure if that asset class experiences some volatility.

Keep in mind that diversification is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Asset allocation strategies also are used in portfolio management. When financial professionals ask you questions about your goals, time horizon, and tolerance for risk, they are getting a better idea about what asset classes may be appropriate for your situation. But like diversification, asset allocation is an approach to help manage investment risk. It does not eliminate the risk of loss if an investment sees a decline in price.

Patience

Impatient investors can get too focused on the day-to-day doings of the financial markets. They can be looking for short-term opportunities rather than longer-term potential. Patient investors, on the other hand, understand that markets fluctuate, and they have built portfolios based on their time horizon, risk tolerance, and goals. A short-term focus may add stress and anxiety to your life, and it could lead to frustration with the investing process.

Consistency

Most people invest a little at a time, within their budget, and with regularity. They invest $50 or $100 or more per month in their retirement account or similar investments. They are investing on “autopilot” to help themselves attempt to build wealth over time.

Consistent investing does not protect against a loss in a declining market or guarantee a profit in a rising market. Consistent investing, sometimes referred to as dollar-cost averaging, is the process of investing a fixed amount of money in an investment vehicle at regular intervals, usually monthly, for an extended period of time regardless of price.

Investors should evaluate their financial ability to continue making purchases through periods of declining and rising prices. The return and principal value of stock prices will fluctuate as market conditions change. Shares, when sold, may be worth more or less than their original cost.

To start crafting a custom investment strategy, give us a call today! You can reach Bulwark Capital Management in Tacoma, Washington at 253.509.0395. 

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