Dollars & Sen$e — Long term vs. short term investing

BY CHRIS HANLY

Investment Consultant, Gary Goldberg Financial Services

As market volatility picks up, a steady hand is needed. Investors are being taunted by prognosticators and so called experts that it may be time to once again follow the old Wall Street axiom of “Sell in May and Walk Away.”

As tempting as this sounds, investors should be reminded that this is in essence market timing – a practice that has seldom worked successfully for most.  Moreover, this saying omits the critical component of when to get back into the market. Instead, as earnings season unfolds, we are spending our time looking at our various investments and discerning where the risks and potential rewards lie.

Given the increasing troubles in Europe (again) and depending on your risk appetite, perhaps a lesser exposure to European equities is warranted. For those who hold fixed income (bond) mutual funds, we advocate rotating into higher quality and shorter maturity bond funds. Most importantly for investors, don’t get caught up in the hype!

Investing is a long-term proposition and is not about day-to-day market gyrations.  Make sure that you have sufficient cash in your savings account to be able to cover any unexpected expenses. We recommend a minimum of six months living expenses as a cushion.

Then, focus on your intermediate investment goals. Select a well-diversified portfolio of no-load mutual funds or stocks and bonds that are not too risky – examining a security’s Beta can be helpful in this process. Lastly, look at your long-term needs. This is where most investors struggle. Most investors, in particular once they are retired, underestimate how long they will need income.

According to the American Medical Association, the life expectancy for someone over age 65 is now 83 – with nearly half living past age 90. In other words, long-term may be a lot longer than you might think. As such, working with a financial advisor can really help you get a grip on how to best allocate your investments to meet each of these critical phases of your investment life-cycle. Remember, the goal of any investment plan is to ensure a comfortable retirement and make sure you don’t end up broke when you’re old.

Christopher Hanly is an investment consultant with Gary Goldberg Financial Services in Suffern can be reached at (845) 368-2900 ext. 247 or chris.hanly@garygoldberg.com.