This is the time of year when financial magazines and the cable business news shows are filled with tips on where to invest in 2011. I’m not sure why a change in the calendar from December 31 to January 1 makes much difference for your investments.
Where should you invest in 2011? If this means what will be the hot stocks, funds, ETFs, or market sectors, I don’t have a clue.
If your question is how I should invest in 2011 my answer would be the same one as it would have been at the start of 2009 or 2008 or 2007 and so on. Invest based upon your financial plan. Invest based upon your goals, your risk tolerance, and your time horizon.
Sound investing starts with a financial plan that addresses your total financial situation. Your investing strategy should be an outgrowth of your financial plan. You should monitor and when needed adjust your investing strategy based upon your progress against your financial plan. Assuming that you are not a professional trader, a long-term strategy is the way to go.
This doesn’t mean that you might not add or remove holdings or adjust your allocation from time to time. Financial planning is an ongoing process, not a one-time event. Things change, make adjustments accordingly. But always fall back on your financial plan.
Is this boring? Yes. I can tell you this, anecdotally folks who stayed invested, stayed with their strategy through the market decline of 2008-09 are mostly better off than those who panicked and sold out at or near the bottom. They booked big losses and largely didn’t participate in the market rebound since March of 2009.
If 2011 is the year for you to get a financial plan in place for you and your family make sure you engage a Fee-Only advisor who takes a Fiduciary approach to your situation. Please feel free to contact me if I can be of help.
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