Having lived through the thrill of victory (the 2009-2014 bull market) and the agony of defeat (the horrendous 2008 bear market), people are finding it difficult to know the “right” steps to take going forward. They wonder:
“Is this a bad time to buy stocks?”
“If I sell this losing investment and buy something else, will I be better off?”
“How much of my retirement money should I put in bonds versus stocks?”
It’s important to keep in mind that since we can’t know the future with certainty, no investment portfolio will ever be perfectly positioned to profit from upcoming events. In retrospect, it is always possible to point to ways we could have made more money (or lost less money) than we did. The human inability to make fully accurate predictions means it’s pointless to think of the “right” investment portfolio simply in terms of making the highest possible profit. If that is your approach, you will always be second-guessing your decisions, and you’ll end up frustrated and disappointed.
Instead, the “right” portfolio is one that realistically faces where you are right now, looks years ahead to where you want to go, and has a very high probability of getting you there on time. Let me describe a few characteristics of the “right” steps to take—not only in 2015, but in the years to come.
All of this is actually good news. It means anybody can play. It’s like learning to drive a car. After a couple of lessons, you know enough to travel around town if you follow a few basic safety guidelines. After all, you’re not trying to qualify for the Indy 500—you just want to reach your destination. In the same way, once you understand SMI’s core concepts, you’re fairly well equipped to make basic investing decisions—and to do the thing that’s “right” for you, year-in and year-out.
Article Originally Written by Austin Pryor
Austin Pryor has 36 years of experience advising investors, and is the founder of the Sound Mind Investing newsletter and website. He's the author of The Sound Mind Investing Handbookwhich enjoys the endorsements of respected Christian teachers with more than 100,000 copies sold.
Sound Mind Investing is a faith-based financial services company dedicated to helping individuals invest successfully. SMI provides time-tested, objective strategies for mutual fund investing, including specific fund recommendations, along with biblically informed, practical teaching on a wide range of other personal finance subjects. Visit sound mind investing at www.soundmindinvesting.com
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