If you’re a football fan (and probably even if you aren’t), then you are aware that we’re closing in on the Super Bowl. This year’s event is unique in that it is the first Super Bowl held in an outdoor, cold-weather site — New Jersey, to be specific. However, the 2014 game shares many similarities to past Super Bowls in terms of what it took for the two teams to arrive at this point. And some of these same characteristics apply to successful investors.
Here are a few of these shared traits:
• A good offense: Most Super Bowl teams are adept at moving up and down the field and crossing the goal line. Good investors know how to choose those investments that have the potential to provide them with the gains they need to keep moving toward their own goals such as a comfortable retirement. That’s why, at every stage of your life, you will need to own a reasonable percentage of growth-oriented investments such as stocks.
• A strong defense: Even a good offense usually isn’t enough to vault a team into the Super Bowl, which is why most participants in the Big Game also have strong defenses. Similarly, the best investors don’t just put all their money in a single type of aggressive instrument and then forget about it — they know that a downturn affecting this particular asset class could prove extremely costly. Instead, they “defend” their portfolios by diversifying their holdings among a range of investments: stocks, bonds, government securities, certificates of deposit and so on. And you can do the same. Keep in mind, however, that although diversification can help reduce the impact of volatility on your portfolio, it can’t guarantee a profit or always protect against loss.
• Perseverance: Every team that makes it to the Super Bowl has had to overcome some type of adversity — injuries to key players, a difficult schedule, bad weather, playoff games against difficult opponents, etc. Successful investors have also had to overcome hurdles, such as bear markets, bad economies, political battles and changing tax laws. Through it all, these investors stay invested, follow a long-term strategy and continue to look for new opportunities. You can follow their example by not jumping out of the market when the going looks tough and not overreacting to scary-sounding headlines.
• Good coaching: Super Bowl teams contain many fine players, but they still need coaches who can analyze situations and make the right decisions at the right times. Smart, experienced investors also benefit from “coaching” — in the form of guidance from financial professionals. It’s not always easy for busy people to study the financial markets, stay current on investment news and review their portfolios on their own. By working with a financial professional who knows your situation, needs, goals and risk tolerance, you will find it much easier to navigate the increasingly complex investment world.
As we’ve seen, some of the same factors that go into producing a team capable of reaching the Super Bowl are also relevant to investors who want to reach their own goals. By incorporating these behaviors and attitudes into your own investment strategy, you’ll be following a pretty good “game plan.”
This article was written by Edward Jones for use by your local Edward Jones financial adviser. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Tina DeWitt, Charlie Wick, Kevin Brubeck and Chris Murray are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728 or in Eagle at 970-328-4959 or 970-328-0361.