Those who live by the old investment adage ‘sell in May and go away’ may not be following a healthy investment strategy. According to BMO InvestorLine, an online investing service, investing should be a habit and must be done with a regular routine.
“Consider establishing a schedule for your investments and managing your portfolio,” says Cesar Rainusso, vice president, BMO InvestorLine. “Adopting simple daily, monthly and annual practices and habits can play a key role in achieving financial success.
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Making the right investment choices takes careful planning and thoughtful actions, something that takes time to develop, he adds.
Here are some tips to help investors adopt smart investing habits :
Do it daily:
- Keep current: Set aside a regular time in the day to read the financial news. Choose publications that give you a clear idea of how the market is performing and focus on particular investments that are of interest to you.
- Make notes: Jot down notes on what happened in the market, your perspective and if you made any adjustments to your portfolio that day. Over time, your entries may reveal patterns and provide you with helpful insight.
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Monthly or Quarterly Review:
- Reflect and react: Evaluate your investments on a monthly or quarterly basis and help you decide if they are performing and if adjustments need to be made. More frequent assessments are generally discouraged; you may be tempted to make changes based on short-term fluctuations in your investment values.
- The big picture: Review how all of your investments are doing – not just your retirement accounts or your stock holdings – to get an indication of overall performance. Gains in one holding might be offset by declines in another, so be sure to examine your entire portfolio.
- Track ROI: Pick appropriate yardsticks to measure the performance of your investments. For example, choose benchmark indexes that track the returns of your own investments.
- Keep records: Record the status of your investments. Collecting information will enable you to learn from your successes – and mistakes – and help you manage your portfolio in the future.
Annual Check-Up:
- Get in order: Take the time to do a thorough review of your portfolio and investing strategies. If you need a reminder, tie it to another annual task such as preparing your income taxes, spring cleaning or end-of-year organizing.
- Detailed review: Study your daily notes and tracking, and analyze your successes/failures throughout the year. Your findings may help you determine the effectiveness of your investment strategy and where improvements can be made in the year ahead.