When should you change investment strategies? | VailDaily.com
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When should you change investment strategies?

Fraser Horn and Dudley IrwinVail, CO, Colorado

Youre free to switch your investment choices as often as you want. But should you make a change?Answering that question isnt always easy. While only you can decide the best strategies to use, here are some general reasons you might consider switching investment portfolios.Changes in your personal life: If you experience a significant change in your life, such as marriage, a new child, divorce, or the death of a loved one, your investment goals may also change significantly. If so, you may want to alter your asset mix to reflect your current goals and risk tolerance. As you near retirement, your investment strategy may become more conservative, and you may want to move some of your money from stocks into less volatile investments.Changes in the economy: If the economy experiences a significant change, such as inflation or a recession, you should make sure the portfolios that you are invested in have the potential to perform well in the current economic environment. For example, if your money is in a small-cap growth portfolio during an economic expansion, you may want to consider making a switch if the economy slows down. However, you probably wont want to make any major changes if you think the economy is just experiencing a temporary blip. For example, a one-day drop in the stock market generally isnt enough reason to dump all your stock investments.Changes in the portfolio: If you notice significant changes in a portfolio you own, you may want to consider making a switch. For example, if the investment performance of a mutual fund has taken a long-term turn for the worse, ask your financial adviser to take a good look at the portfolio and (if its a sector fund) at its sector. You may want to switch not only out of that fund, but also out of the sector. If a portfolio has a new manager, watch the portfolio to see if there are any significant changes. If the portfolios investment strategy appears to have changed become more aggressive, more conservative, or less diversified, for example it may no longer match your personal investment strategy, and you and your financial adviser may decide to switch to a new portfolio. Mutual funds are sold by prospectus only, which contains complete information, including charges and expenses. Please read it carefully before investing.Reasons not to switch: As a long-term investor, you should be cautious about switching investment portfolios. Changing investments at the wrong time could result in missing out on potential gains. If your decision to switch is based on changes in the portfolio or the economy, you should believe that those are long-term changes and not temporary conditions.Even if you have concerns about a portfolio, there may be reasons to hold on to it a little while longer. If, for example, the portfolio has an investment philosophy that exactly matches yours or if you have faith in the investment managers judgment, you may want to wait and make your decision about switching in a few months.If you switch: Before investing in a new fund, do your research. Make sure you achieve or maintain your desired allocation among stocks, bonds and money-market investments. And dont base your choice solely on past performance. A portfolio that was hot last year may fizzle this year. In addition to looking at a portfolios long-term performance record, consider the outlook for economic growth, inflation, interest rates and the market. The better informed you are, the more confident you can be about your investment decisions.The accuracy and completeness of this material are not guaranteed. The opinions expressed are those of Fraser M. Horn and Dudley M. Irwin and are not necessarily those of Berthel Fisher or its affiliates. The material is distributed solely for information purposes and is not a solicitation of an offer to buy any security or instrument or to participate in any trading strategy. Provided courtesy of Fraser M. Horn and Dudley M. Irwin, investment adviser representatives with Berthel Fisher in Edwards. Registered representative of and securities offered through Berthel Fisher & Company Financial Services, Inc. Member FINRA/SIPC. 1st & Main Investment Advisors is independent of BFCFS.


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