Vail Daily column: Be an environmentally friendly investor
On April 22, we observe Earth Day, a worldwide event focusing on protecting the environment. As a citizen of this planet, you may want to take part in Earth Day activities. And as an investor, you can learn some valuable lessons from the environmental movement.
Here are a few ideas to consider:
• Recycle proven strategies: Throughout the past few decades, we have discovered ways of bringing new life to objects we would have previously thrown away. When you invest, you also don’t need to discard things you’ve used before — such as proven investment strategies. For example, one tried-and-true technique is to simply purchase investments appropriate for your needs and risk tolerance, and then hold these investments until either your situation changes or the investments themselves are no longer the same as when you bought them. (To illustrate: You might have bought stock in a company whose products or services are not as competitive as they once were.)
Avoid Toxic Moves
• Avoid toxic investment moves: Since the first Earth Day in 1970, we have had some success in identifying and eliminating toxins in our air and water. You can also find — and avoid — “toxic” investment moves. One such move is chasing a “hot” stock. By the time you hear about this stock — from a friend, relative or even a television or internet commentator — it may already be cooling off. Even more importantly, it might not be suitable for your needs, either because it’s too risky or because you already own several similar stocks. Hot stocks aren’t so hot if they aren’t right for you.
• Reduce excess investments in your portfolio: Environmentalists stress the need for all of us to reduce our footprint on earth — that is, we can help improve the environment by owning less stuff. The same idea can also apply to investing. If you took a close look at your portfolio, you might find investments that you’ve held for years but whose purpose is no longer clear to you. Some may even be duplicates, or near-duplicates, of other investments. You might be able to improve your financial picture by getting rid of this clutter. By selling investments you no longer need, you could use the proceeds to purchase new investments that may be far more effective in helping you meet your objectives.
Seeds of Opportunity
• Plant seeds of opportunity: Many Earth Day lesson plans for students emphasize the value of planting gardens and trees. As an investor, you, too, need to look for ways to plant seeds of opportunity so that you can eventually harvest the results. Specifically, look for investments that, like trees, can grow and prosper over years and decades. Of course, growth-oriented investments carry investment risk, including the possible loss of principal. Yet, to achieve your long-term goals, such as a comfortable retirement, you will need some growth potential in your portfolio. You can reduce the level of risk by owning a mix of investments — including less aggressive vehicles, such as bonds — in your portfolio.
Each year, Earth Day comes and goes. But its messages have had a profound impact on generations of people interested in preserving our environment. And translating some of these lessons to the investment arena can have a powerful effect on your financial future.
This article was written by Edward Jones for use by local Edward Jones financial advisers. Edward Jones and its associates and financial advisers do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Charlie Wick, Chris Murray and Kevin Brubeck are financial advisers with Edward Jones Investments. They can be reached in Edwards at 970-926-1728, in Eagle at 970-328-4959 or 970-328-0361, or in Avon at 970-688-5240.
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