GUEST COLUMN: Sound investing habits

Investing tips for creating a balanced financial portfolio.

When markets are uncertain, it is easy to forget that the equities in your portfolio are comprised of companies that produce basic products that are integral to our activities of daily living: toothpaste, soap, shampoo and gas.

Regardless of market performance, we purchase and use these products on a regular basis. The success of a portfolio is not necessarily reliant upon big-ticket items such as the products of Apple or BlackBerry.

At some point in the history of each index, there have been periods of negative returns. Such periods do not mean that the market was permanently negative, only that it was part of a dip. It is important to note that our reaction to such negative returns may do us a disservice.

Key points to remember:

• No one can predict the future, not even a portfolio analyst, manager or TV commentator.

• The perfect investment does not exist. All investments have some measure of volatility and it is our job to understand them.

• Do not get caught up in short-term events or have a knee-jerk reaction to world news. What is of concern today will eventually pass and even out.

• Pain from loss is greater than pleasure derived from gain. It is impossible to eliminate loss; even renowned investors experience it. We must manage the source of such loss and adjust our portfolios on a pro-active basis rather than on a reactive one.

• Maintain a well-balanced investment approach. Invest with the mind-set that in the long-term, well balanced portfolios will likely yield positive results.

Good investing habits:

Be proactive – Do not react to negative market events. Ensure your portfolio is balanced to withstand market volatility.

Have a goal – Have a financial plan that will meet your needs and goals.

Prioritize – Attend to the most important things first, not the urgent things. Urgency comes from neglect.

Seek to understand, then seek to be understood – Understand how your portfolio is structured. It is your money and you need to be accountable for its growth and management. Diagnose before prescribing. Diagnosis requires honest and open discussion.

Synergize – Ensure your portfolio is not overlapping, but that its components are working together to ensure financial success. Simplify your holdings and place them with one trusted and proven institution.

Review, review, review – Meet with your advisor on a regular basis to ensure both are working together to achieve your financial success.

Colleen Barker is a certified financial planner with The Fraser Financial Group, Vernon. This article is provided for information purposes only. Please consult with a professional advisor before implementing a strategy.