Doing well with investments over time means avoiding emotional input in your decisions – fear, greed, emotional attachment to or aversion to certain investments and so on
Right now, fear may seem the prominent emotion: “I can’t afford to be in stocks, look what happened in the last few years!” (The same person might have wanted to be 100% stocks 4 years ago ….)
However, if you listen to this fear, and buy only bonds, CDs, fixed annuities, REITS, etc., you risk the greed reaction down the line: “How come my returns are the same as my pal’s? Why didn’t you have me investing for growth?”
Obviously, stripping the emotions out of the decision making is critical. Doing so would allow for balanced allocation to stocks, bonds and other appropriate investments. This way, the volatility now is dampened some, yet the return in the future has the requisite growth for the risks taken.
Where are you on the fear/greed balance? Do you have stocks you refuse to sell (or will never buy)?
Let us know if you have questions or comments. Thanks,