On Sept. 5, we observe Labor Day, a celebration of the American worker. And there’s a lot to celebrate, because our workers have accomplished great things and, in the process, demonstrated a variety of impressive character traits — many of which also can be useful to investors.
• Perseverance — Have you ever read about an inventor who failed dozens of times before finally hitting on a winner? Or a scientist who studied the same problem for decades before discovering a revolutionary solution? All kinds of workers display this type of perseverance, in one form or another. As an investor, you, too, will need this “stick-to-itiveness” because you will face challenges. Markets will drop, individual investments may disappoint, tax laws may change, and so on. But if you’re patient, and you follow a long-term strategy that’s based on your needs, risk tolerance and time horizon, you can overcome those obstacles that may be blocking progress toward your goals.
• Inquisitiveness — During your own work, you’ve probably found that you can improve your effectiveness simply by asking a few questions or otherwise learning a little more about your tasks at hand. As an investor, you’ll also find that knowledge is power — because the more you know about investing and investments, the better prepared you can be when making decisions. Sometimes, this knowledge can help you look past the so-called experts who are touting the “next hot stock.” Other times, your curiosity may lead you to find new opportunities. In any case, learn as much as you can, and if you work with a financial professional, ask questions — as many as necessary. The investment world is fascinating, and it can be complex — but it is also understandable to those who make the effort.
• Flexibility — When something isn’t working, you may need to try another approach. Successful workers know this — and so do successful investors. Suppose, for example, you have been trying to boost your overall return by buying and selling investments. After a while, you may realize that such behavior is costly — in more ways than one. You will likely rack up fees and commissions, you may incur the highest rate of capital gains taxes (assessed on investments held less than one year), and you will be disrupting any cohesive investment strategy you’ve established. Upon recognizing these problems, you could decide to “switch gears” and follow a long-term, “buy-and-hold” strategy. That’s flexibility — and that’s a great attribute for investors.
• Vision — Good workers have a clear picture of what they want to accomplish — and they know what they must do reach their goal. As an investor, you also need to establish a vision of where you want to go and how you can get there. So when contemplating your retirement, try to foresee the lifestyle you hope to lead — will you travel the world or stay close to home, pursuing your hobbies? Then, use this vision to help guide your actions, such as increasing your contributions to your 401(k) or IRA, or changing the investment mix within these accounts.
Transferring what you learn from the working world to the investment arena can help make investing a less laborious — and potentially more enjoyable — process. So put that knowledge to good use.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor. Tye Hoffmann is an investment representative for Edward Jones Investments located at 974 N. Main St. in Tooele. He can be contacted at 833-9440 or at 830-0917.