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August 2010
Investing for the Long Term
By: Don Edwards, CFA
There are a lot of different ways to invest money. Some people like to gamble and go for quick riches while others want to make sure their money is very safe. Some like stocks while others like bonds. I have heard people swear that the only good investment is gold and other people swear that farm ground is the answer. Blue chip stocks, tech stocks, emerging market stocks, real estate, high yield bonds, and certificates of deposit; there are many options when it comes to investing your money. To some, the many different options lead them to do nothing. Others endlessly chase one hot investment after another, never achieving much but always on the lookout for the next big thing.
All of us here at Wabash Capital are often asked if one investment or another is a “good investment”. The answer to this question is not always easy. A good investment is one that complements your existing investment portfolio and helps you to achieve your investment goals. Since everyone has different investment goals, a good investment for one person may not be a good investment for another.
Keeping a focus on the long term helps keep you from straying away from your path. Whatever your choice of investment, the key to success is being able to set a realistic goal and stay focused, not getting distracted by investments that have nothing to do with what you are trying to achieve.
When many of our clients first come to us, they have never really thought about what a realistic investment goal is. Most of our clients ultimately want the same thing: to live a certain lifestyle in retirement without worrying about running out of money. This may sound simplistic, but it’s what most people ask us to help them with. Whether it’s a young person just beginning their working career, or someone already retired, we help clients set realistic objectives and manage their money in a way that can best help them live the kind of life they want.
We at Wabash Capital believe in managing risk through portfolio diversification. We try to take the emotion out of investing by looking at economic and company fundamentals. While there will always be risk associated with investing, we try to reduce that risk as much as possible by the way we construct our portfolios. We also take a long term view of investing and stay away from short term investing fads that come and go.
The last few years have been difficult for investors. Sometimes people look for shortcuts during difficult times. Sticking with proven methods and keeping focus on your long term goals are the best ways to ensure your investing success. Our goal is to help investors do this.