Broker Check

Rules for a Sophisticated Investor Do?

June 16, 2016

For most investors, implementing a long-term investment strategy is an easy thing to do.  But, what happens when significant market volatility and uncertainty develops and presents emotional strains such as anxiety, anger or excitement?  That is generally where the line between sophisticated and novice investors is drawn.  During those challenging times, sophisticated investors tend to adhere to the following rules:

  1. Remind him or herself of their workable financial plan;
  2. Refrain from emotionally responding to market volatility; and
  3. Stick to his or her discipline.

Without implementing a workable financial plan, it is very difficult for anyone to adhere to a sound investment strategy or consider him or herself a sophisticated investor. The aspect of not knowing and behavioral finance will likely take over.  

Creating a financial plan that you understand and trust (your foundation) is the first step to achieving financial freedom and peace of mind. From there, it's understanding your investor profile, ignoring the daily noise and focusing on the big picture. The big picture generally coincides with the belief that long term direction of the equity markets is up.

For anyone interested in discussing their financial plan or long-term investment strategy, feel free to contact my office directly at 781.236.0802.