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 The
Companion Advisor: Techniques
& Methods
Making your portfolio worry-free: Quick tips
on how to minimize financial stress
Contributed by Fidelity Investments Canada
Limited
A Companion Advisor Article
Many things cause stress, but your portfolio shouldn't
be one of them. After all, isn't the whole point of investing so that
you don't have to worry about money?
With that in mind, here are some tips on how you can build a worry-free
portfolio. Not only will the following points help you eliminate financial
hassles, they will help you sleep better at night too.
Focus on quality
Every day, people make money on Internet stocks, start-ups and turnaround
situations. But each of these investments requires an extremely high tolerance
for risk—a tolerance much higher than most people have. Which means
those investments don't belong in the worry-free portfolio. Instead of
putting your money into high-risk opportunities, focus on buying quality
for a reasonable price. Search for blue-chip stocks with a good dividend
record. Or government bonds. Or cash investments with solid principal
guarantees. Quality makes for a better sleep.
Be a conservative investor
The conservative investor thinks about protecting wealth first and building
wealth second. Conservative investors know how much risk they're willing
to accept to achieve their investment goals, and they keep their portfolios
well within that limit. Conservative investors make cautious assumptions
about expected annual returns. They diversify their portfolios, and keep
track of them on a regular basis, to ensure their holdings are still in
line with their risk tolerances. Become a conservative investor and a
lot of financial stress will simply disappear.
Don't forget about income
Investment income isn't just for retirees: well-selected income investments
such as government bonds, GICs and dividend-producing stock can help stabilize
a portfolio during times of volatility, resulting in less stress and easier
sleep. How much income you need from your portfolio is largely a matter
of personal circumstances. Obviously, a retired couple needs more than
a single person with a steady job.
Keep it simple
Many investors think they need to complement their portfolio with "specialty"
investments such as emerging market funds, investment trusts, commodities,
hedge funds, gold bullion, etc. While all of these investments can enhance
portfolio diversification and potentially boost performance, they require
a good deal of investment knowledge, as well as ongoing research and monitoring.
By no means are they "worry-free" investments. If you're looking
to eliminate hassles, keep it simple and stick to the big three: stocks,
bonds and cash.
Work with a professional
Getting a professional opinion on your investment choices can do a lot
to reduce financial stress. Working with someone who has expert-level
knowledge and experience of how a portfolio is supposed to work can make
it a lot easier to be comfortable with your financial decisions, no matter
what the market is doing.
* This content is for information purposes only
and is not intended as specific investment advice. We strongly recommend
that you consult your investment professional for a comprehensive review
of your personal financial situation. Information is subject to change
without notice and Fidelity Investments Canada Limited will not be held
liable for any inaccuracies.
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, Fiscal Agents Money Management Newsletter
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