The unknown can be scary. For many, the topic of investing remains one of the great unknowns.1 But overcoming your fear of investing can help you develop a long-term financial strategy. It can feel overwhelming to start, but the surest way to conquer your fear of the unknown is to get more information about the topic. In this spirit, there are four fundamental strategies for investing that can lead to greater long-term financial security.
1. Avoid making emotional decisions with money
One of the key foundations for sound investing is based in common sense. Positive and negative emotional triggers can impact how we make decisions, including financial moves. This is only natural — your money is more than just numbers in a spreadsheet, it’s your retirement, your children’s education. But a sound strategy can help us avoid being swept up in the moment and making a rash decision.
Instead of hopping on a financial and emotional rollercoaster, take a pause and remember the mind-money connection. Check in with your emotions. Delay big purchases for at least 24 hours. Talk with other people, particularly a financial professional, about any big financial decisions. Through these steps, you’ll take the emotional charge out of your financial decisions and can stick to a disciplined investment strategy.
2. Don’t try to “time” the market
Perhaps you’ve heard the saying, “Buy low and sell high.” In an ideal world, every investment would follow these words. This phrase overlooks a crucial mindset in investing: you want to invest for the long term. The value of the stock market and other assets, like real estate, can go up and down, particularly in the short term. Sometimes people buy stock, for instance, and then the price drops. They panic and sell the stock. Unfortunately, once they leave the market, they lose the opportunity to regain their original investment, as well as the chance to earn in the event the stock increases over time.
As you think about starting to invest your money, take a look at the decades-long performance of various assets. In the decade since the Great Recession, for example, the stock market has had one of its strongest eras in the past 140 years.2 But if people tried to time the market and sold their securities, they likely won’t experience the increased earnings today. In short, it’s almost impossible for anyone to time the markets successfully for any period of time.
3. Diversify your portfolio
Even people who claim not to know anything about investing probably know the directive, “diversity your portfolio.”3 But what does it mean exactly? It means that a robust, stable portfolio holds a range of assets. This is often described as a “balanced portfolio” — a mix of stocks and bonds that align to how much risk you are willing to take on and how long you have until the funds are needed. Stocks tend to be more volatile, but they can gain more value over time.
Bonds, on the other hand, are slower to earn, but they are also less risky. Yet there is a world beyond the simple prescription of mixing stocks and bonds.
Building your long-term financial portfolio can also include products like and annuities. As long as you continue to pay your premium, whole life insurance offers a guaranteed death benefit and the policy accrues as a cash asset.4 5 6
You can use this money to fund big purchases, such as a child’s education or starting a business. Annuities are also something you can pay for in small increments over a long time, or in one single premium with an insurance company. In return, the premiums you’ve paid can be turned into a guaranteed income stream, helping you achieve income security in retirement.
4. Work with a financial professional
When you’re starting to learn about investing, it may feel intimidating to ask for support. But remember, there is no price for entry in working with a financial professional. Their experience lies in helping people develop customized financial strategies to help meet your long-term goals. And just as everyone has different life goals, some people also begin from very different places. The role of a financial professional is to help you develop the strategy that works best for you and evolves as your goals do.
As the adage goes, every journey begins with a single step. This holds true with investing — and the first step is in learning more about its key strategies.
Brought to you by The Guardian Network © 2022. The Guardian Life Insurance Company of America®, New York, NY 2022-132476 Exp. 1/2024
1 Millennials are afraid to invest in the stock market, CNBC, Oct. 25, 2017
2 The stock market’s gain in the last 10 years is one of its best runs since the 1800s, CNBC, March 15, 2019
3 Diversification does not guarantee profit or protect against market loss.
4 Some whole life polices do not have cash values in the first two years of the policy and don’t pay a dividend until the policy’s third year. Talk to your financial representative and refer to your individual whole life policy illustration for more information.
5 Policy benefits are reduced by any outstanding loan or loan interest and/or withdrawals. Dividends, if any, are affected by policy loans and loan interest. Withdrawals above the cost basis may result in taxable ordinary income. If the policy lapses, or is surrendered, any outstanding loans considered gain in the policy may be subject to ordinary income taxes. If the policy is a Modified Endowment Contract (MEC), loans are treated like withdrawals, but as gain first, subject to ordinary income taxes. If the policy owner is under 59 ½, any taxable withdrawal may also be subject to a 10% federal tax penalty.
6 All whole life insurance policy guarantees are subject to the timely payment of all required premiums and the claims paying ability of the issuing insurance company. Policy loans and withdrawals affect the guarantees by reducing the policy’s death benefit and cash values.
7 All guarantees including the death benefit payments are dependent upon the claims paying ability of the issuing insurance company.
Material discussed is meant for general informational purposes only and is not to be construed as a recommendation or advice. All investments contain risk and may lose value. Investing in the bond market is subject to certain risks including market, interest rate, issuer, credit and inflation risk. Equities may decline in value due to both real and perceived general market, economic and industry conditions. Past performance is not a guarantee of future results.