Many unsuspecting investors do it all the time. Any time the stock market makes the news – good or bad – they react by making changes to their existing portfolios. Sometimes the changes are initiated by the investors themselves, but other times the advisor suggests the changes, convincing the investor to go along.
Am I implying that making changes to your investment portfolio is a bad thing? Essentially and for the most part, yes – except in the case of rebalancing your portfolio back to its targeted allocations, which technically speaking isn’t considered a change in your portfolio. Here’s why.
You visit an advisor. He or she helps you put together what virtually any financial professional would claim is the best possible portfolio to help you achieve your long-term financial goals, be it retirement or college funds for your child or grandchild. Then in a matter of just a relatively short period, without any significant changes in your life that necessitate altering your investing profile, you need to make changes?
Let’s think carefully about that picture. What does it tell you about an advisor if they are constantly moving funds around? I interpret it along these lines: they don't really know what they’re doing, where they’re going, or how to get there. They were hoping this portfolio they suggested might do the trick. But, now, based on what the stock market is doing, they think that other one will be better instead. Does this sound like what you want your advisor to be doing with your hard-earned investment money?
It’s interesting, but some people actually see this destructive behavior as a sign that a financial advisor is smart and on top of things. The opposite is true, in my opinion, simply because no one can predict what is going to happen tomorrow. So if your investment strategy revolves around reacting to short-term market movements, you should think twice. In fact, any time your advisor alters your portfolio in this manner, it is indicative of only one thing: that he or she got it all wrong previously. Isn’t it?
Visit LaserFG.com or call 877.656.9111 right now to book your complimentary, confidential consultation with a financial professional who has your best interest at heart and who is willing to ask the right questions to help you make a plan that will get you where you want to go. You’ll be paired with an experienced financial professional who can help you plan for a secure future, regardless of your current financial situation. Retirement planning means planning for ALL aspects of your life after retirement. If you’re ready, we’re here to help.