“Cycling” Through Some Investment Ideas
Bicycle-themed advice to get your finances in order
By Jenny Reddington | Financial Advisor, Edward Jones
Bicycling . . . it’s great exercise and an eco-friendly mode of transit. Beyond those two obvious and oft-cited benefits, it also offers some important lessons about investing. Here are a few to consider:
• Put the brakes on risky moves. To keep safe, experienced cyclists regularly do two things: They maintain their breaks and avoid unnecessary risks. As an investor, you can combine these two actions by putting your own “brakes” on risky moves. For example, if you’re tempted to buy some hot investment you heard about, you may want to think twice before acting. Why? In the first place, most “hot” investments don’t stay hot for too long — they may even be cooling off by the time you hear about them. Even more importantly, they might not be appropriate for either your risk tolerance or your need to diversify your portfolio. When you invest, you can’t eliminate all risks, but you can reduce them by avoiding impulsive moves and sticking with a disciplined, long-term strategy based on your needs and goals.
• Get regular financial tune-ups. Avid cyclists keep their bikes in good shape through regular maintenance. When you invest, you usually don’t need to make a lot of drastic moves, but you should periodically “tune up” your portfolio, possibly with the help of a financial professional. Such a tune-up may involve any number of steps, but the main goal is to update your portfolio so it reflects where you’re at in life: your goals, risk tolerance, earnings, and family situation.
• Protect yourself from bumps in the road. All serious bicyclists — and all bicyclists serious about keeping their heads intact — wear helmets when they are riding, because they know the dangers of rough terrain. Likewise, you need to protect yourself from the bumps in the road that could impede your progress toward your objectives. For starters, life insurance can help your family meet some essential needs — pay the mortgage, educate children, and so on — in case something were to happen to you. And you may need disability insurance to replace your income due to temporary illness or injury. Also, you might want long-term care insurance, which guards against the potentially catastrophic costs of an extended stay in a nursing home or the services of a home health care worker.
• Don’t stop pedaling. When going long distances, bicyclists ride through rain, wind, sun, and mosquitoes. They elude angry motorists and change flat tires. In short, they persist in reaching their destinations. As an investor, you will set some goals that you may not reach until far in the future, such as a comfortable retirement. You, too, need determination and persistence. Continue to invest, in good markets and bad, through unsettling political and global events — even despite your own occasional doubts.
Whether you’re an avid cyclist or not, following these principles can help keep your financial wheels moving along the road to your goals.