At the end of every year I take some time to evaluate my portfolio and how I’ve allocated all of my investments. I always take into account changes that have occurred over the past 365 including sectors or investments that have take off, and others that have hit the downhill slope.
2015 was an interesting year. After a rough August, things ended fairly flat, and my portfolio overall endured a .4% loss. Pretty close to how the S&P 500 performed.
Anyone paying attention to the markets so far in 2016 may be feeling a bit rattled at this point. My personal advice… Don’t Be! Investing is a long-term game. 2016 may very well be a down year or even the beginning of a multi-year bear market. Take advantage of the opportunity!
A good friend of mine is an Advisor at Morgan Stanley. His opinion is that based on his personal analysis of the fundamentals, it’s likely that we’ll see a market retraction this year. But is that any reason to run for the hills? Heck no! Stay the course and treat the market decline as an opportunity.
Don’t forget about dollar cost averaging! Aside from compound interest, dollar cost averaging may be one of the most killer investing phenomena to take advantage of. If you invest money consistently – through the market ups and downs – you will end up with a lower cost basis over time.
Think about it this way, if you continuously save and invest your money in the market, you will inevitable buy more stock when the market goes down and less stock when the market is going up. That’s the beauty of dollar cost averaging!