Investing Many folks think of accumulating money for their next car or for holiday spending as investing. These are really savings activities, since they span a short time frame and usually involve low-risk strategies and products such as bank accounts, CD’s and the like. Investing is an activity that usually spans a longer time frame. Investing also involves taking on some risk, because while longer-term investing strategies often provide better returns than savings, investment products differ from savings because they can also go down in value.Smart investing takes on a tolerable level of risks for your particular situation, and no more; and positions you to achieve the best possible investment returns while taking those risks. Using this approach to investing may pay off in the long term and lets the markets work for you instead of against you.Most conventional approaches to investing haven’t worked well for investors – they’re informal, emotional and undisciplined. Consider these perspectives, which may be all too familiar to you:Investors often try to time market movements, migrate towards “hot” sectors or assets, or look for advisors that have had recent success with their investment picks. These speculative approaches fail much more often than they succeed and really represent little more than gamblingMany financial advisors use standardized plans for everyone, or push whatever investment is being suggested by the home office – this may be good for the advisor, but likely is not so good for the investorEmotions often get in the way – investors often “run away” when markets go down, stay away too long (like many cautious folks are doing right now), and “miss the boat” when the inevitable market recovery comes along. Smart investing helps take emotion out of the pictureMost folks don’t know what level of risks they are taking with their investments, how to measure those risks or where they come from. No wonder they over-react when things go bad!Many investors (and financial advisors) are also very fickle – they switch strategies and investment holdings too often, thereby incurring unnecessary costs and taxes; and miss out on the long-term benefits of sticking with a well-built planThe keys to successful long-term investing are simple to say, but tough to do – diversify to manage your risks and efficiency, and re-balance periodically to stay on plan for the long term. The advisors at Wealth Design Group can help guide you over time along this disciplined path, because (if left to their own devices) many investors will revert back to more conventional, and less successful, tactics.Diversification does not mean owning (for example only) equal values of GE, ExxonMobil and Google stock – although different in many ways, those stocks are all in the same asset class and therefore tend to move up and down too similarly over time for this to be called a “diverse” portfolio. Being truly diversified means you have blended groups of assets that are at least partially uncorrelated (i.e., move up or down in value out of synch with each other). With a diverse portfolio mix, some of your assets go up in value when others are going sideways or down, so your ups and downs in total aren’t so extreme and your risk is properly managed. Diversification does not guarantee against the possibility of loss.Building a diverse portfolio is very tough to do yourself, but is one of the keys to managing your investment risk.While investment fees and percentages certainly affect long-term success, what’s disclosed often doesn’t tell the whole story. You should also watch out for hidden and variable costs that aren’t disclosed – too many trades of individual holdings, the resulting transaction and income tax costs, and other trading and management inefficiencies.Some investors (especially those approaching, or already in, retirement) may need significant and steady investment income to support their lifestyle, but can’t take much risk with their limited assets. These conflicting problems – too little return vs. too much risk – can be addressed with investment products and features designed for those situations. For example, certain annuities can provide a decent and predictable stream of retirement income, now or in the future, that is contractually guaranteed* never to run out, no matter how long you live, without you having to give up your assets to get those guarantees. Make sure you understand the costs and benefits of whatever investment product you choose – they are very appropriate in some situations, but many are complex and not “right” for everyone.At Wealth Design Group, our financial professionals can help you analyze and understand your investments today, put you on a customized path to investment success, and help coach you to look towards tomorrow.*All guarantees associated with an annuity are backed by the claims paying ability of the issuing insurer.