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Staying Focused

by Joe Chapin

The performance of the stock market this year has tested the mettle of investors, especially the thousands of new stockholders who entered the market within the past few years. For these investors, Wall Street's record breaking run seemed like the norm, and last years correction was a rude awakening. More seasoned investors, however, know that the market performs in cycles and a downswing is a natural and expected occurrence.

Experienced investors know how to mentally brace themselves during these tough times. They have done their homework and know that anyone willing to invest for the long haul has been rewarded with good returns that beat the low, single-digit returns from other investments.

Some people believe that creating a winning stock portfolio is a matter of luck. Don't believe that for a moment. Successful investors don't rely on chance for results. They know how to build a strong portfolio and how to prepare for varying market conditions. For example, a successful investorwill seek out leading companies from a variety of industries with a history of providing solid returns over the long term. If you don't care to invest in individual stocks, this is best achieved by investing in a broad-based mutual fund with proven management ability. Good mutual fund managers prepare for market downturns and to a certain degree, protect shareholders. Always see how a fund has performed in bad times when considering a fund.

Successful investors also make sure that their investments are properly allocated. The well-configured portfolio should maintain some sort of balance, although for the most part, heavy involvement in stocks and/or stock funds is advisable.

You will also want to remember tax-free or tax sheltered investments. Consider maxing out your 401-K if one is available to you. Your money will grow much faster if you do not have to pay taxes on it year after year.

Finally, experienced investors will turn a market drop into an advantage by looking for bargains. When stocks are closer to their lows than their highs, buying makes much more sense than selling. Buy low and sell high. The real key to a successful investing approach is to plan your investment course and stick to it.

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Staying Focused

by Joe Chapin

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