Keys To Long-Term Investing (p.39)

By Scott Tippins

Do the ups and downs in the financial markets bother you? If you answered yes, you’re not alone. The recent turmoil has created uncertainty and anxiety for many investors, especially those who haven’t ever experienced a bear market – witnessing only very short-lived market downturns.

Relieve your stock market jitters. Consider these three tips for long-term in-vesting: focus on the long-term, invest regularly, and diversify.

FOCUS ON THE LONG-TERM
If you watch the ups and downs of the mar-ket over a short time period, you’ll often see large fluctuations. But if you watch the markets over a longer time, you’ll find the movements much less dramatic. The key is not to become too overly concerned with the movement of the market in one or even two-year periods, if your investment time horizon is at least five to seven years. History has shown that the longer you remain invested, the greater your chances for success.

INVEST REGULARLY
Doing so will let you take advantage of swings in stock prices. When stock prices decrease, you purchase more shares, and when prices are higher, you purchase fewer shares. Though no investment program can assure a profit or protect against loss, investing consistently can help you ride out market ups and downs. Dollar Cost Averaging involves continuous investing. Investors need to consider their ability and willingness to continue investing through periods of low price levels.

DIVERSIFY
Don’t put all your eggs in one basket. Instead, consider spreading your risk by dividing your money among a variety of asset classes – stocks, bonds, etc. This way, if one investment performs poorly, it only affects part of your total investments. No investment strategy, such as asset allocation or diversification, can guarantee a profit or protect against loss in periods of declining values.

While you have no control over how much the value of your investments change, your understanding of these three keys should help you make it through the tough times.

Scott Tippins is a Financial Representative of Principal National Life Insurance Company and Principal Life Insurance Company and a Registered Representative of Princor Financial Services Corporation. He can be reached at 919-755-8696.

Securities offered through Princor Financial Services Corporation, 800-247-1737, member SIPC. Principal National (except in New York) and Principal Life are issuing insurance companies of the Principal Financial Group. Principal National, Principal Life and Princor® are members of the Principal Financial Group®, Des Moines, IA 50392.