Take the Emotion Out of Investing

Take the Emotion Out of Investing


When asked to identify their investment mistakes, 36 percent of investors cited losing money as the most painful.¹ Although no one wants to lose money, investors who stick with a long-term strategy may be better able to weather the periodic ups and downs in their portfolios.

A buy-and-hold strategy using mutual funds may help take some of the emotion out of investment decisions. Too often, acting on emotion can result in buying an investment at a peak price or selling it at a low price — the exact opposite of the fundamental principle of "buy low and sell high."

Mutual funds offer the benefit of professional management. A manager, or team of managers, oversees a portfolio of securities and makes buy and sell decisions that are based on the fund's specific investment objective. These managers base their decisions on extensive research and often have access to a team of analysts.

Currently, there are more than 8,000 mutual funds to choose from, each with a specific investment objective. Fund objectives range from preservation of principal to aggressive growth, so there is bound to be a fund that will meet your specific needs. Depending on its objective, the fund may invest in stocks, bonds, cash equivalents, or some combination.

A mutual fund may add some diversification to your portfolio. Each fund typically comprises a diversified portfolio of securities. Mutual funds are thereby subject to the investment risks associated with the underlying investments held by the fund. Because mutual funds spread money across different investments, any losses experienced in one investment may be partially or fully offset by gains in another. The return and principal value of mutual fund shares fluctuate with market conditions. Shares, when sold, may be worth more or less than their original cost.

By staying committed to your investment strategy, you may be able to avoid costly mistakes that could keep you from meeting your financial goals. Call today to discuss which investments may be appropriate for your long-term financial strategy.

Mutual funds are sold only by prospectus. Please consider the investment objectives, risks, charges, and expenses carefully before investing. The prospectus, which contains this and other information about the investment company, can be obtained from your financial professional. Be sure to read the prospectus carefully before deciding whether to invest.

1) Money, December 2004

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